Driving Value... Inspiring the Future

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Driving value... Ins piring the future

Annual Report and Accounts 2015 Driving value... Inspiring the future

Sacem is one of the world’s leading cultural and creative rights organisations. Our mission is to protect and enhance the value of our members’ rights, and to inspire a strong and sustainable future for our industry.

Through leading edge technology, an effective licensing strategy and our regional network we collect €862m annually in authors’ rights (more than €1.3bn including mandates) and distribute royalties to around 293,000 songwriters, composers and publishers around the world.

In addition, we play a core role in cultural and artistic development within France and internationally, investing over €56m spent on social and cultural aids to support talent and creativity across all ages, activities and communities.

Over the long term, our objectives are to continue to invest in technology leadership and processes to drive efficiency and maximise value for our members, and to support artistic creativity and long-term cultural sustainability.

The Dø Songwriters/ Composers/Performers Louane Songwriter/Composer/ Performer Strategic overview Management report Financial statements

President’s statement Strategic overview

A summary of our activities, 02 Sacem at a glance approach and achievements, the 04 President’s statement role we play in society, and how our business model and strategy 06 Chief Executive’s review enable us to deliver successfully 08 Business review 04 for our members. – Adapting in the digital world – Delivering efficiency for creators Chief Executive’s review – Sustaining culture and creation 16 Market overview 18 Highlights of the year 24 Business model and strategy

06 Management report adapting A detailed report and analysis 28 General information of our operations, markets and 40 Economic position in the digital governance, and trends affecting world future development. 10 delivering efficiency for creators 12 Financial statements sustaining The audited financial statements and 48 Statutory auditor’s report notes relating to our performance for 49 Income and expenses statement culture and the year ended 31 December 2015. creation 50 Balance sheet 14 52 Notes to the financial statements 54 Appendices 64 Glossary

Welcome to our 2015 Annual Report. If you would like to learn more about Sacem, please visit our website at: www.sacem.fr/en

ANNUAL REPORT 2015 | SACEM 01 Sacem at a glance

We are a world leader in a rapidly evolving marketplace, committed to maximising The Avener the value of our members’ rights and to Songwriter/Composer/ delivering the best returns. We invest heavily Performer in technology development, and our innovative systems enable us to collect and distribute royalties efficiently, accurately and fairly.

Collections Members

Our focus on technology, combined with the effectiveness of the Our core objective is to protect Licensing department and our strong regional network, has enabled our members’ rights, and we are us to adapt efficiently and to stay ahead in terms of our ability to deliver committed to ensuring that we for our members. 2015 saw another record year, with total collections have the best technology and reaching €862.2 million relating to our own members’ rights, and a further resources to support and sustain €457 million in mandates from other societies. their work. At the end of 2015, we had 157,270 members in France and around the world – encompassing 164 nationalities – comprising 151,435 creators and 5,835 publishers.

Authors’ rights Mandates Members €862.2m €457.0m 157,270

829.7 862.2 455.2 457.0 153,190 157,270

2014 2015 2014 2015 2014 2015 +3.9% +0.4% +3%

Read more Read more page 36 page 34

ANNUAL REPORT 2015 | SACEM 03 President’s statement Laurent Petitgirard

Fair, efficient and accurate “ distribution is in Sacem’s DNA.”

04 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

We are working hard to ensure the best returns for our members, and to create a sustainable environment in which culture and creativity can flourish.

Board focus We are determined to address the Sacem’s Board of Directors has European Commission’s attitude to Board priorities always strived to ensure at least the issue of authors’ rights, and are 80% distribution, where collections working hard to change its approach Governance, transparency are based on identified programmes, to the fair distribution of value to and value thus limiting recourse to surveys authors and creators, which we feel • We are committed to and sundry studies that inevitably currently tends to protect the profits maintaining strong standards penalise works that are broadcast of major multinationals, rather than of governance within Sacem, on a small scale. contributing financially to the works ensuring that our structure on which their prosperity is founded. This commitment to efficiently and procedures meet best distributing fair and accurate rights In the coming months and years, we practice and the expectations to as many songwriters, composers are committed to relentlessly of our members and wider and publishers as possible goes hand articulating the clear fact that those stakeholders. in hand with maintaining a balance who benefit from the creativity of between the costs that are necessary authors and writers must contribute • To enhance transparency. in achieving such high levels of to making their work possible. We have developed a precision, and a reasonable level progressive approach to our of management costs. reporting and the way in which we communicate at all levels 2015 was no exception, with our Laurent Petitgirard Chairman of Sacem’s of the Society, and will documentation and distribution continue to improve. departments working to credit over Board of Directors 2 million works to 293,000 creators Member of the Institute of France • We deliver tremendous and publishers around the world. value to our members and are Record collections determined to ensure that we and distribution continue to maximise returns, particularly in a rapidly evolving Collections rose considerably this digital environment. year, largely thanks to the efficiency of our licencing department and regional network, but also due to • It is also a priority for us substantial reorganisation in terms of to engage positively with processes and investment allocation. regulators, authorities and government in France and Low levels of rights generated in more widely in Europe to some aspects of the digital world – ensure that we can achieve in particular through streaming, and the very best for our members, despite the enormous scale of the our industry and the future digital broadcast of our repertoires, sustainability of culture remains the biggest cause of the and creativity. dichotomy between the increasing and pervasive presence of music in the public sphere and all aspects of daily life, and the relatively low remuneration it generates in some areas.

ANNUAL REPORT 2015 | SACEM 05 Chief Executive’s review Jean-Noël Tronc

“Sacem is adapting strongly to the changing digital and creative landscape.”

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In a year of great activity and transformation, we have achieved record levels of collections and distribution.

Overview Our transformation strategy Our strategy is also based on strong 2015 was a particularly intense During the year we developed several partnerships with other societies, year for Sacem. We focused on new services accessible from the especially through Armonia. As the accelerating our digital transformation new sacem.fr portal, providing further President of the Board of Armonia, to enhance services to our members illustration of the commitment that we I am convinced that we are stronger and simplify the ways in which have to our society’s modernisation together in our aim to ensure users can pay authors’ rights. and transparency. better efficiency for collective The efficiency of our business management both for licensing 68,300 Sacem members have model is demonstrated in particular and processing. registered their own space on the by the strong level of authors’ rights website and use the online services. Armonia has flourished over the monetisation – at approximately last 4 years into a community of €11 per inhabitant, one of the The new electronic version of the 9 European societies – Sacem highest in the industry worldwide. distribution statements, available (France), Sacem (Luxemburg), since October 2015, features an With 12% of our members coming SGAE (Spain), SIAE (Italy), Sabam unprecedented level of detail and from outside France and representing (Belgique), Artisjus (Hungary), SUISA a recap of distributions relating 164 nationalities – and with online (Switzerland), SPA (Portugal) and to the dissemination data across all licenses that cover more than AKM (Austria). In addition, following channels, including radio, television, 100 countries for some digital UMPI and Wixen Music Publishing, discotheques, and on-line. As the service providers – we are truly Socan (Canada) has joined us pace of digitalisation accelerates, so a global organisation. on a mandate basis. have the services and usage rate for With growth across almost all sectors our secure online works registration To sum up, we are a world leader of revenues in 2015, we increased system which was launched in 2014 in a rapidly evolving marketplace, collections by 3.9% compared with some 5,600 works being committed to maximising the value of to last year, reaching a record registered on average each month. our members’ rights and to delivering level of €862 million. the best returns. We invest heavily in Our IT strategy is driven by technology development, and our During the year, Sacem distributed innovation. By developing new innovative systems enable us to €659.3 million of authors’ rights. In services and using cutting-edge collect and distribute royalties addition, we distributed €25.4 million technologies such as Cassandra, efficiently, accurately and fairly. for cultural projects and €48.9 million Elastic Search and Hadoop, in social benefits to our members. Sacem processed 589.4 billion We also channelled €451.5 million for download and streaming mandates relating to both authors’ transactions. The efficiency of the Jean-Noël Tronc rights and neighbouring rights. analytical tools that we use provide Chief Executive Officer These numbers clearly demonstrate strong leverage in licensing and the global nature of our operations, distribution for on-line rights. and reflect the real footprint of our activities which encompass not only our own members but also our responsibilities on behalf of other rights owners. As we develop Sacem and the value of our members’ authors‘ rights, we “Sacem is a society of authors are also fully committed to disciplined cost control. Compared to 2014, our which has understood the net operating cost ratio for royalty digital challen ges.” collections decreased to 15.9%. Selah Sue Songwriter/Composer/Performer

ANNUAL REPORT 2015 | SACEM 07 Business review

Strong progress in Sacem’s evolution

We aim to maintain our leading Sacem is constantly evolving to remain position the rapidly evolving digital efficient and effective, particularly in age by sustaining and enhancing our business model – that of a non-profit a world of digital and cultural change. society of authors, supporting our members and remaining strong and proud of our diversity across all our activities. In this context, an important goal for Sacem is to enhance services for our members and clients while promoting the transparency of our operations and activities with our partners around the world. Strategic plan Future plans We have developed and implemented As one of the world’s leading cultural a comprehensive strategic plan to and creative rights companies, our overhaul our tools and business mission is to protect and enhance processes in order to effectively the value of our members’ rights, and meet our service and transparency to inspire a strong and sustainable objectives. We have doubled our future for our industry. Over the annual IT investment in order to long-term, our objectives are to strengthen the quality and safety of continue to invest in technology our collection tools and distribution leadership and processes to drive services in the context of a significant efficiency and maximise value for digital revolution and the globalisation rights holders, and to support of rights management issues, artistic creativity and long-term and to effectively deliver a range cultural sustainability. of new services. We are committed to developing a In April 2015 we launched fair and effective collection business a new portal which reflected the for the music industry, to the development of new services protection of copyright, and to available on a 24/7 basis for all creating and environment in which our partners. Members could culture and creativity can flourish already benefit from a wide range and be properly rewarded. of services – such as personalized access to their repertoire, the ability to submit all their new works online, and access to distribution rules and Sacem PLUS – through a programme enabling them to benefit from commercial deals. Members now also have access to a new reporting system relating to their works, using tools capable of providing

08 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Our priorities

In order to continue to deliver the best returns to our members, and help sustain a creative environment in which songwriters, composers and publishers can flourish, we are focusing on certain key priorities that reflect our core purpose. These are described over the following pages.

personalised and detailed analysis of all media broadcasts for online adapting services and the rights generated by their works. An action plan was IN the digital approved by the Board of Directors to enable the coming years to world accelerate the pace of distributions. On the customer side, a completely new digital space was created on the portal enabling members to access all their account information, with details of invoices and pricing as well as online payment methods. This platform also facilitates the collection Page 10 of broadcast information, contracting and payment for occasional sessions. These online services also include delivering the redesign of the site’s functionality, giving access to our support efficiency programmes for cultural projects. Authors’ rights protection for creators Beyond transparency and service development, we also intend to increase our capabilities around the defence of copyright. This happens primarily through Sacem Université, the creation and implementation of new educational platforms, and sharing and debate of ideas based Page 12 on our collaborative and partnership approach. It also happens through the participation of hundreds of our members – authors, composers sustaining and publishers – grouped together culture and as ‘Angels’ and participating in advocacy and lobbying activities creation designed to promote copyright and collective management. This comprehensive strategy is backed by a committed communication programme that encompasses all social networks.

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ANNUAL REPORT 2015 | SACEM 09 Business review continued adapting in the digital world The explosion in the number, complexity and usage of digital devices for streaming and downloading makes it all Our success depends on our ability to adapt. the more important that Ongoing investment programmes ensure Sacem retains its position at the forefront of digital that we remain at the forefront of technology, technology. which is at the heart of our commitment to generating value for our members.

Partnerships

We have almost 500,000 customers including audiovisual 662,000 media such as TV and radio, internet service providers, Contracts completed telecoms broadcasters, by Sacem. streaming and downloading platforms, theatres, local authorities, associations, cafés, restaurants, shops and nightclubs.

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Sacem’s members are able to Online works register their works in a few registration clicks at any time of the day or night, with guaranteed security service and confidentiality. 67,118 works were registered online during 2015, an average of around 5,600 every month.

5bn In 2015, we processed nearly 5 billion usage report lines to distribute value from 589.4 billion download and streaming transactions, more than twice the 2014 total.

In 2015, we signed over 130 online contracts, including 17 with international players for 589bn both Sacem’s direct repertoire and that of UMPI (Universal Downloads and streams Music Publishing International). processed by Sacem IT in 2015.

360º data visualisation

ANNUAL REPORT 2015 | SACEM 11 Business review continued delivering efficiency for creators

Sacem’s aim is to deliver the best value for creators, and we are constantly innovating to make sure that maximum royalties are distributed promptly and accurately.

Creators need to be confident Online access that they are receiving what they deserve in terms of distributed authors’ rights, so that they are free to focus on imagination and the creation of works. We have developed an industry- leading online portal which enables members to access their accounts at any time of the day or night and check the status of payments and processes. At the end of 2015, over 68,300 164 Sacem members had registered their own space on the sacem. Nationalities represented fr website and use the various including 19,100 foreign online services. members – Sacem is the most international of all the authors’ societies in the world.

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Our network and cutting- Maximising edge technology enable us to authors’ rights maximise collections, and we have among the lowest cost-to- collection ratio in our industry – meaning that our members can be confident that they are being properly rewarded.

Stromae Songwriter/Composer/ Performer 157,270 Members in France and throughout the world comprising 151,435 creators and 5,835 publishers.

Commitment to As it is clear throughout this review, Sacem operates with transparency high levels of transparency. We value above all else the trust and support of our members and our industry within France and internationally, and are very aware that the future of creativity depends on openness and the fair distribution of authors’ rights.

ANNUAL REPORT 2015 | SACEM 13 Business review continued

Investing in our cultural sustaining heritage culture and creation

Inspiring the future of creativity and cultural expression is at the core of Sacem’s purpose. We invest strongly in a wide range of programmes and activities, creating an environment of opportunity for songwriters, composers and publishers.

Within France, across Europe Ensuring a and internationally we work sustainable hard to provide an environment in which new and emerging creative future authors and artists can express their creativity and develop their for all talents on a wider stage.

Angélique Kidjo Songwriter/Composer/ Performer Developing creative talent ¤56m Spent on social and cultural programmes and aids.

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Sacem has a unique responsibility for the Training, sustainability of our 1,820 development cultural and creative Cultural projects supported heritage, and we are and education tireless in our mission by Sacem in 2015 (over to support, encourage 3,478 projects submitted). and invest in many hundreds of initiatives and activities to nurture our industry.

Our sustainability programme has a particular focus on nurturing young talent. We initiate and support masterclasses, workshops and concerts and invest throughout the educational system to help build skills and confidence in future creators, and the opportunity for these to flourish.

Christine and the Queens Songwriter/Composer/Performer

See Investment page 38

ANNUAL REPORT 2015 | SACEM 15 Market overview

A vibrant Global market size The market in which we operate is of tremendous economic and growing significance. The Cultural and Creative Industries contribute strongly to the world economy, industry and at Sacem we have a key role to play in their development. Sacem is at the heart of one of the world’s largest and most dynamic industries, worth in excess of €500bn and employing more US$2,015bn The value of global Cultural and than 7 million people in Europe alone. Creative Industries revenues.

29.5m The number of people employed in the Cultural and Creative Industries worldwide.

A leading employer

Within Europe, the Cultural and Creative Industries employ more than 7 million people, with around 20 per cent of these employed in France. Almost a quarter of a million people are employed in the music industry in France, almost 25 per cent of the European total.

Construction 7m 15.3 More than 7 million people Food & beverage services are employed in the European 7.3 Cultural and Creative Industries, Cultural and Creative more than the Automotive, 7.1 Chemical and Telecoms Metal and steel sectors combined. 5.0 Food & bev. products 4.8 1.2m Automotive 3.0 People employed in Europe’s music industry. Chemical 1.3 3rd Telecoms Largest employer 1.2 in Europe

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4.2% Writers and composers Music at the heart Cultural and Creative Industries’ contribution to European GDP

Sacem’s key purpose is to Music is at the heart of the ensure fair and maximum returns Cultural and Creative Industries, to rights holders, and support and is worth around €25.3bn in creativity – building a fair, Europe and €7.9bn in France. efficient and dynamic The music industry is a dynamic environment in which culture sector which is at the centre and creation are nurtured of technological change, and and inspired, and can flourish Sacem’s role is to support its sustainably. We are at the growth and properly reward centre of a vibrant and growing songwriters, composers industry, and are fully committed and publishers. to delivering on our purpose and ensuring that everyone within – and affected by – our industry benefits fully. US$15bn The value of global music industry revenues, a growth of 3.2%.

Digital growth €6.7bn Sacem has a pivotal role as a The value of global music technology player in a sector in industry digital revenues. which the impact of digital change is significant. We invest heavily on an ongoing basis to ensure that we are maintaining 10.2% our position at the forefront of Increase in digital revenues, this changing environment. which now account for 45% of industry revenues – overtaking physical for the first time.

Sources: Sacem research; EY – Cultural and Creative Industries publications; IFPI Global Music Report 2016; Eurostat

ANNUAL REPORT 2015 | SACEM 17 Highlights of the year

This year has been one February of tremendous activity and achievement, with strong progress and success across key focus areas.

January For the 12th Week of Worldwide recognition Renewal of Sound, Sacem organised for Alexandre Desplat pan-European contract practical workshops in and Angélique Kidjo with Microsoft seven major French cities Angélique Kidjo, In February, Sacem (Bordeaux, Grenoble, Lille, Vice-President of Cisac renewed its pan-European Paris, Nantes, Nice and (the International contract with Microsoft Rennes) around the theme Confederation of Authors for its Groove (formerly of “How to install sound and Composers Societies) Xbox Music) service which systems and effective and Sacem member, won offers a subscription soundproofing” in a Grammy Award in 2015 service for both streaming partnership with sound for “Best World Music and downloading. experts and acousticians, Album” for her last album, Sacem Université for sound professionals in Eve. This was the third partners the 12th Week all music and entertainment Grammy for the star of Sound venues, especially cafés, from Benin. Sacem’s educational bars and restaurants. and cultural platform In the “Best Score supported the Week of Soundtrack for Visual Sound, an event which Media” category, aims to raise awareness Alexandre Desplat – among the public, and one of the French masters society in general, of the of film music and Sacem importance of sound and member – was also the quality of our acoustic awarded a Grammy for environment. the original soundtrack of The Grand Budapest Hotel, a film directed by 12e édition 2015 Wes Anderson. 2015 was an important year for the worldwide recognition of LASEMAINEDUSON this talented author and du 19 janvier au 8 février 2015 dans toute la France www.lasemaineduson.org composer, who also won a BAFTA for Best Original Music and an Oscar for Best Original Score for the same soundtrack. Alexandre Desplat Songwriter/Composer

PROGRAMME Entrée libre et gratuite dans la limite des places disponibles

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March 1st Sacem Authors’ rights Prize Sacem Université launched its first Sacem Authors’ rights Prize, for students in the Master 2 programme in Intellectual Property Rights or IT and Communication Law, in order to raise awareness among both students and academics of the Signing of pan- April stakes involved in the Barofest 2014: the European contract area of copyright and French contemporary with Tidal authors’ rights. music festivals map Prior to its acquisition The second edition of the by Project Panther (owned Students were invited to study carried out jointly by by American rapper write an article on the very the CNV, Irma and Sacem, Jay Z), Sacem signed topical issue “Copyright and presented at the a pan-European contract tomorrow: what role for Printemps de Bourges, with Tidal for its technical intermediaries?”. revealed the very high subscription streaming Five finalists were density and terrific service. Tidal’s offer, shortlisted by the editorial diversity of the 1,615 which does not include committee, and then contemporary music free streaming, is Launch of the new invited to present their festivals held in France characterised by the many sacem.fr portal thoughts to a jury made in 2014. exclusive songs by the In 2015, sacem.fr got up of professionals and Key figures included: artists it represents, such a makeover. Members, chaired by Jack Lang, as Rihanna and Beyoncé, clients, project leaders former Culture Minister • 70 festivals per region and its high sound quality. and the public in general and President of the on average now have at their disposal Institute of the Arab World. their own space within • Jazz, blues and In 2015, 27 classes from the portal’s five new sites. improvised music as 17 universities entered well as amplified electro New online services, the competition. music represent nearly simplification of use, 60% of the festivals reformatting of editorial in France content – the portal’s ecosystem has been • 217 festivals in entirely rethought, with Île-de-France, 198 SPA joins Armonia user experience at the in Rhône-Alpes, SPA, the Portuguese heart of the project team’s 162 in the PACA Regions Society of Authors, joined planning and development. • 845 (52%) of the Armonia, Europe’s first The site’s reinvigoration portal for licenses for festivals take place in addressed two major summer, with 427 in on-line music services. goals: to deliver for clients, Launched in 2012 by spring, 280 in autumn as for members, all the and 63 in winter. Sacem, Sgae and Siae, necessary day-to-day Armonia is a one-stop online services such as shop that aims to client accounts, licence encourage pan-European requests, file follow-up licenses. Open to all and legislative guidance, songwriter, composer and while providing richer, music publishing societies more relevant and in Europe, Armonia educational accessibility. has already signed multinational agreements with online services such as Google Play, Deezer, Beatport and YouTube.

Jack Lang surrounded by the five finalists.

ANNUAL REPORT 2015 | SACEM 19 Highlights of the year continued

June

Seminar on musical Sacem wins the Legal Contract with Apple July creation Management Innovation Music Sacem Université and Award Sacem signed a contract Ircam (the Institute for Sacem’s legal with iTunes for the launch Music/Acoustic Research management team was of Apple Music, Apple’s and Coordination) awarded the Legal worldwide subscription organised an exceptional Management Innovation streaming service. The event designed for Prize for setting up a scope of this contract, composers to discuss procedure that is both which covers 41 territories, the technological unique and reliable. The includes the exploitation breakthroughs at the heart jury, which rewards legal of Sacem members’ of music creation and the departments implementing musical works and video future of music. They were innovative solutions to clips being made available Renewal of invited to reflect on their improve corporate legal on the new streaming pan-European contract approaches to creation management every year, service and on Apple’s with Napster/Rhapsody and to participate in a emphasised Sacem’s first ever live radio Sacem renewed its debate on the subject commitment to the channel, Beats 1. pan-European contract of “What is the future of protection of personal data. It also offers special with Napster/Rhapsody music creation? Sound conditions for the free for its subscription The innovation developed processing, spatialisation, service, Connect. streaming service, which by Sacem’s legal team indexation, and is available in France is based on three points: The signing of this type orchestration.” in partnership with reliable internal of contract before the SFR Telco. Smart: client relations procedures, centralisation launch of such a new in the palm of your hand of information through service is another clear In 2015, all the teams in ad-hoc software, and demonstration of the the network benefited tailored training sessions efficiency of Sacem’s from two new to optimise awareness of collective management state-of-the-art digital personal data protection. in the digital age. tools: a mapping application to help target and visualise missions (Smartweb) and a smartphone with a mobile app for their roadmap, also in the form of an interactive map. The goal of these two efficient nomad customer relations and management systems is to facilitate the teamwork of the seventy local offices in charge of collecting authors’ rights from cafés, restaurants and small businesses.

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August A historic agreement signed by Sacem with public On 24 September 2015, the SNSP (Trade Union for Public Venues in France) and Sacem signed a memorandum of understanding to better meet the diverse needs of performance venues, while guaranteeing fair Renewal of September For this groundbreaking remuneration for music pan-European initiative, a hundred creators and publishers. agreement with Vevo singer-songwriters – Sacem renewed the all Sacem members – With simplified pan-European agreement work with primary school calculations and royalty with Vevo for its free classes (CM1 or CM2) collection processes, and ad-based audiovisual throughout the school the development of a clear hosting service year to develop artistic service policy for the (essentially HD videos). and cultural educational 255 member venues, this projects all over France, agreement aims to provide with the participation better transparency and of a hundred classes and services to concert halls, La Fabrique à Chansons teaching teams in all thereby promoting the Sacem, in partnership with regions. Accompanied dissemination of repertoires the Ministry of National by established artists, while protecting the Education and Higher the children compose the interests of creators and Learning, the Ministry lyrics and music of a song broadcasters. of Culture and together. They will perform This is the first ever Communication, and their work in public agreement between the Canopé network, through mini-concerts Sacem and a professional launched La Fabrique during the summer of 2016. group representing à Chansons (The Song subsidised live Factory) to coincide performance venues. with the 2015 back to school campaign.

MINISTÈRE MINISTÈRE DE L’ÉDUCATION NATIONALE, DE LA CULTURE DE L’ENSEIGNEMENT SUPÉRIEUR ET DE LA COMMUNICATION ET DE LA RECHERCHE

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ANNUAL REPORT 2015 | SACEM 21 Highlights of the year continued

October November

First detailed online Paris terrorist attacks: distribution sheet the shock. In 2015, Sacem became Following January’s attack the world’s first collective against Charlie Hebdo that management society to took the lives of 17 people, enable its members to among them author and access broadcast data Sacem member Georges used to allocate authors’ Wolinski, Paris was once rights and to provide a again the target of previously unavailable terrorism. A series of degree of detail in the explosions in the Bataclan constituent elements concert hall and in other of online distribution. public meeting places Key figures: Authors’ rights in caused 130 deaths and Two innovations are now Arab countries wounded over 400 – the available on the electronic Sacem Université, in deadliest acts of terrorism report listing the authors’ €83bn+ partnership with the since the Second World rights distributed to in turnover in 2013 Institute of the Arab World, War. Sacem paid homage each creator: a recap organised a round table to the victims, who of distribution amounts – on the subject of “Authors’ included two of its by origin, family, country, 1.3 rights in Arab countries.” members, composers in percentage and in million jobs Proposed topics included Christophe Foultier and graphs – and the detailed remuneration for private Christophe Lellouche, distribution information, copying – examples while immediately by work, family, type of 1.2% included: Algeria; the new releasing emergency rights and country. growth, higher than GDP law governing intellectual funding of €500,000 for Culture and creativity growth rate and that of property in Morocco; and live shows. Sacem also under pressure employment in France the “Lang law” of 1985 joined the campaign From an initiative of over the same period. in France – the stakes “Tous au concert” inviting France Créative, a group With the creation of and prospects regarding everyone to attend of societies focused on 240,000 jobs in 2013, collective management concerts, carry on going culture to which Sacem music ranks as the 2nd in Egypt, the role of the out and stand up to such belongs, EY published the highest employer in media in highlighting barbaric behaviour. 2nd Economic Overview cultural and creative Moroccan musical of Culture and Creation industries behind heritage and the economic which analysed the visual arts. value of creative and importance of a dozen cultural industries. cultural and creative sectors ranging from music to cinema, live performance to television, via video games and publishing. This second edition confirms the leading position and dynamic nature of these industries within the French economy.

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RICHARD DUBUGNON • GRAND PRIX DE LA MUSIQUE SYMPHONIQUE, CARRIÈRE December

BIRÉLI LAGRÈNE • GRAND PRIX DU JAZZ LE QUATUOR • GRAND PRIX DE L’HUMOUR

BOB SINCLAR • GRAND ALICE DONA • GRAND PRIX DE LA CHANSON PRIX DES MUSIQUES FRANÇAISE, AUTEUR-COMPOSITEUR ÉLECTRONIQUES

ALAIN CHAMFORT • GRAND PRIX DE LA CHANSON FRANÇAISE, CRÉATEUR-INTERPRÈTE

FRANÇOIS GOETGHEBEUR • GRAND PRIX ALEXANDRE DESPLAT • GRAND PRIX PIERRE ADENOT • GRAND PRIX DE LA MUSIQUE DE L’AUTEUR-RÉALISATEUR DE L’AUDIOVISUEL DU RÉPERTOIRE SACEM À L’EXPORT POUR L’IMAGE

CAMILLE PÉPIN • GRAND PRIX DE LA MUSIQUE MAGIC SYSTEM • GRAND PRIX DES MUSIQUES DU MONDE VÉRONIQUE SANSON • PRIX SPÉCIAL DE LA SACEM VIANNEY • PRIX FRANCIS LEMARQUE CAROLINE MOLKO • WARNER CHAPPELL “CHRISTINE” DE CHRISTINE AND THE QUEENS • SYMPHONIQUE, JEUNE COMPOSITEUR MUSIC FRANCE - GRAND PRIX PRIX ROLF MARBOT DE LA CHANSON DE L’ANNÉE Grands Prix winners DE L’ÉDITION MUSICALE Worldwide culture and creativity Award Artist Cisac (the International Confederation Of Sacem Special Prize Véronique Sanson Societies Of Authors Grand Prize for French Song, Alain Chamfort And Composers) creator-performer published its first study on the relevance of culture Grand Prize for French Song, Alice Dona and creativity to the author-composer world economy. Jazz Grand Prize Bireli Lagrene Produced by EY, this Film/Video Director’s Grand Prize François Goetghebeur overview values culture Grand Prize for World Music Magic System and creativity to be worth 2,250 thousand million Grand Prize for Sacem repertoire abroad Alexandre Desplat dollars, representing 3% Grand Prize for Humour Le Quatuor of world GDP. Francis Lemarque Prize Vianney Employment in these Grand Prize for Film/Video Music Pierre Adenot sectors represents 29.5 million jobs, or 1% Grand Prize for Music Publishing Caroline Molko – Warner Chappell Music of world active population. France This world survey forms Grand Prize for Symphony Music (career) Richard Dubugnon part of the on-going Grand Prize for Symphony Music Camille Pépin studies undertaken by EY (young composer) regarding the economic Grand Prize for Electro Bob Sinclar importance of culture in France in 2013 and 2015 Rolf Marbot Prize for the song of the year ‘Christine’ by Christine and the Queens (www.francecreative.fr) and in Europe in 2014 (www.creatingeurope.eu).

Sacem Grands Prix: As every year, we honour spotlighting talent authors, composers, In order to show that it will publishers, film-makers not give in to the threats of and producers and the terrorists who attacked comedians. The ceremony young people in France, singles out the careers of and who threaten our those whose words, notes lifestyle where art and and works have left their culture occupy prominent mark on all the repertoires roles, Sacem maintained represented by Sacem. its Grand Prix ceremony, The 7th Sacem award paying homage to the ceremony was held in the victims of the attacks. Folies Bergère on 30th November, honouring 15 artists.

ANNUAL REPORT 2015 | SACEM 23 Business model and strategy maximising value and sustaining creation

The model that we have developed Cultural heritage We have developed over many years of experience We also have a critical responsibility a unique business enables us to deliver strongly on our for ensuring the future of our industry. key responsibilities – to maximise We support and invest in a wide model and progressive the value of members’ rights, and to range of events, educational ensure that we have the right strategy initiatives, training, technical courses, strategy which drive in place to ensure a robust future festivals and performances in order a sustainable cycle for artists and creators. to nurture young and future talents within the creative and cultural An enormous amount of investment industries. This results in an of value delivery and and expertise go in to ensuring that environment where creation and we stay ahead of the curve to support for creators. expression can flourish, and in which make these deliverables a reality, creators can expect to be properly in particular the technological rewarded. leadership that is required in our fast-developing digital world. Operations Investment in talented, experienced Collection and dedicated people is at the In order to properly and fairly reward heart of our successful operations. artists, creators and publishers – and We ensure that, in order to fulfil to make the process of collection and our objectives within collection, distribution as efficient as possible – distribution and cultural heritage, our we have a continuous system of people are motivated and rewarded review and innovation, supported and have a clear path towards a by some of our industry’s best talent fulfilling career. Equally, investment and by significant year-on-year in technology is a major priority given investment in people, technology the rapidly-evolving digital world on and a network that has unparalleled which we operate. As a technology experience and expertise. leader, we aim to continue high levels Investment of investment so that we can continue Distribution to lead the way in terms of value We distribute amongst the highest and efficiency. proportion of collected royalties in our industry. Ensuring that artists, creators and publishers receive a proper reward is a central part of our responsibility, and combined with our dedication to collecting efficiently, this results in a sustaining cycle for creators and consumers alike.

Christine and The Queens Songwriter/Composer/Performer

24 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

“Before my project was what it is today, I was already benefitting from good support from Sacem.”

Stromae Songwriter/Composer/Performer

We SERVE “Nothing could OUR MEMBERS be riskier than not taking risks.”

Shai Maestro Songwriter/Jazz composer LLECTIO CO N

OPERATIONS

DI N STRIBUTIO Ibeyi Songwriters/Composers/ Performers

We invest in the future by employing the best people and developing cutting edge technology, enabling our members to get the best value.

ANNUAL REPORT 2015 | SACEM 25 How we collect

We have well developed, robust and well-proven processes, and are fully focused on maximising the value of royalties for all our members. Our effective licensing strategy and our strong network, combined with a commitment to technological development, mean that we are well positioned to maintain our leading position.

Sacem authors’ TV/Radio 320.4 326.2 rights collections €326.2m +1.8% €862.2m 2014 2015

General rights 280.7 284.2 €284.2m +1.2%

2014 2015

International 76.4 82.1 €82.1m +7.6%

2014 2015

Private Copying 78.0 64.8 €78.0m +20.3%

2014 2015

CD/DVD/BD 56.7 52.3 €52.3m -7.8%

2014 2015

Internet 39.5 30.6 €39.5m +29%

2014 2015

Mandates and other 455.2 457.0 Mandates and other €457.0m +0.4% €457.0m

2014 2015

26 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

What we invest in

The strength of our collection processes and systems enables us to invest heavily in all areas, in order to support and energise the full cycle of sustainable value creation.

We nurture talent and creativity within and outside Sacem and are committed to delivering the best for everyone that we have a relationship with.

Operations

More than 80% of our expenses M€ 2015 2014 relate to our staff and systems. €150.0m Personnel expenses 134.6 133.5 We are proud and fortunate to have some of the most -1.6% Other operating expenses 48.4 47.9 knowledgeable and experienced Net amortisation and provision 13.5 13.3 people in our industry, supported Other income -46.5 -42.1 152.5 by advanced technology and 150.0 Total operating costs 150.0 152.5 cutting edge processes.

2014 2015

Distribution of Sacem authors’ rights

We distribute to our members M€ 2015 2014 amongst the highest proportion €733.6 Sacem members 538.1 506.9 of collected authors’ rights in our Other collecting societies 121.2 110.6 industry. Our members are our +6.9% lifeblood, and we are dedicated Social programmes 48.9 46.4 Cultural projects (25% CP) 25.4 22.6 to ensuring that each one 733.6 receives the best possible return 686.5 Sub-total 733.6 686.5 for their creativity. Other collective societies and mandators 451.5 419.6 Total distributions 2014 2015 including mandates 1,185.0 1,106.1

Distribution of Mandates Variation in distribution reserves €451.5m -€15.8m +7.6%

419.6 451.5 26.3

-15.8 2014 2015 2014 2015

ANNUAL REPORT 2015 | SACEM 27 Management report 1. General information

1.1. Our operations 1.2. Governance One of the world’s Established in 1851, Sacem is a Founded and managed by its leading authors’ rights private non-profit non-trading entity members – songwriters/authors, managed by its members – mainly composers and publishers collective societies. songwriters, composers and music of music, authors of dubbing and publishers. Our role is to negotiate subtitles, poets, comedians and with users and collect and accurately author-directors – Sacem operates distribute authors’ rights to our as a cooperative. Elected by the members when their work is available Sacem General Assembly, the publicly, for example through Board of Directors is made up of audiovisual media, concerts, six authors, six composers and festivals, the internet, cinemas, six music publishers (one-third nightclubs and shops, or reproduced renewable each year in June), as well through, for example, digital files, as an author-director as a permanent CD, DVDs or video games. We also member and an author-director as manage the collection and distribution a substitute. The Board of Directors of royalties to members of other makes all decisions essential for the similar French and international life of Sacem. It appoints the CEO, organisations which have given who manages the Society and is Sacem a mandate to represent them. responsible for implementing the policies defined by the Board. Support, protect and defend Our business operations involve Sacem governance also includes supporting creative people, eleven different committees. protecting their repertoire and The two statutory committees, defending their interests both elected by the General Assembly nationally and internationally. Sacem and independent of the Board is a member of various international of Directors and departments, organisations working for the rights of exercise supervisory functions. creative people and the protection of The Supervisory and Accounts copyright, including the International Committee meets once a week Confederation of Societies of Authors to check the Society’s receipts, and Composers (Cisac), the expenses and accounts. International Office of Mechanical Publishing (Biem), and the European The Programming Committee Consortium of Societies of Authors checks programmes, tables and and Composers (Gesac). In France distribution documents. we work alongside other industry The IPC Committee, provided for groups lobbying for similar rights, in Article R. 321-6-3 of the IPC and strive to deliver the best quality (Intellectual Property Code) and also of services and support for elected by the General Assembly, our members. gives opinion in cases where there We also play a crucial role in the has been a refusal to communicate sustainability of musical and cultural a document to a member. All three creativity. For over fifty years we committees report on their activities have been implementing a range of to the General Assembly. cultural development programmes, There are also four regulatory encompassing all the richness and committees, which are consultative diversity of cultural creativity. Our and whose members are appointed activities include supporting creative by the Board of Directors: an careers, encouraging the renewal of Audiovisual Committee, Variety repertoires, facilitating the distribution Committee, Authors-Directors of creative output and helping young Committee and Symphonic professionals get a start in the Committee. business. Since 1985 these cultural activities have been funded by Furthermore, there are four technical revenues from royalties on Private committees: an Assistance for Copying – enabling us to support Self-production Committee, a 1,820 projects across a range of Memoires Committee, a Professional cultural genres in 2015. Training Committee and a Young Audiences Committee.

28 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Board of Directors for 2016-2017

First row, left to right: Thierry Communal, Nicolas Galibert, Jean Fauque, Christian Gaubert, Jean-Marie Moreau, Gilles Amado; Second row, left to right: Marion Sarraut, Wally Badarou, Caroline Molko, Alain Chamfort, David Séchan (Vice-president), Jean-Claude Petit (President), Dominique Pankratoff, Arlette Tabart, Jean-Max Rivière (Vice-president), Elisabeth Anaïs, Bruno Lion, Yves Duteil, Thierry Perrier, Laurent Petitgirard (Vice-president).

How Sacem is run

Songwriters Four regulatory committees participate The elects The Board appoints ■ Audiovisual Composers in General of Directors ■ Authors-Directors Assembly (elected by their peers) ■ Symphonic Publishers ■ Variety elects appoints Four technical committees IPC R.321-6-3 Committee ■ Assistance for Self-production Two statutory committees audit General ■ Programming ■ Memoires Management ■ Supervisory & Accounts ■ Professional Training ■ Young Audiences

Supervision • The statutory auditor. Few private companies undergo such Strong governance • The Cour des Comptes through regular detailed supervision. The the Supervisory Committee for Our members ensure that Sacem examination of Sacem management Royalty Collection and Distribution is run to high standards of operations guarantees efficiency Societies (SPRDs). governance and transparency. and transparency. With 119 members representing • The Ministry of Culture and Sacem is subject to fivefold 157,270 creators and publishers Communication, which validates surveillance by: across our various boards statutory changes. and committees. • The Supervisory & Accounts Committee, made up of two • The French Parliament, which authors, two composers and two checks how the ‘25% share publishers, each elected for three from Private Copying’ is used for years by the General Assembly. Cultural Projects. They are independent of both the Board of Directors and the CEO.

ANNUAL REPORT 2015 | SACEM 29 Management report 1. General information continued

1.3. Members 1.4. Repertoire Sacem currently has 157,270 We represent, manage and protect members – up from 153,190 in 2014 – 100 million works throughout the 662,000 in France and throughout the world, world and across the range of Contracts set up on behalf of comprising 151,435 creators and creative genres. This repertoire is more than 500,000 clients. 5,835 publishers. Its members expanding every day – in 2015, more include songwriters, composers and than 1.6 million new works were publishers; author-directors; poets; added, 188,763 by Sacem members. dubbing and subtitle authors; and 1.5 Collections authors of humorous texts and 1.5.1. International sketches, among others. An Sacem collects royalties for its indication of our appeal is that members in 95 countries worldwide 4,080 new members joined in 2015. through 163 agreements signed with With 19,100 foreign members from 115 foreign societies. Moreover, in 164 different nationalities, Sacem some territories, like Luxembourg, is the world’s most internationally Lebanon and Monaco, Sacem signs diverse authors’ Society. contracts directly or through its local structure with music broadcasters, Over 68,300 Sacem members have from whom rights are collected registered their own space on the before being distributed to members. sacem.fr website and use the various online services. Members are able In countries with which Sacem has to register their works with a few agreements, it is that country’s clicks at any time of the day or night, copyright society that establishes with guaranteed levels of security contracts and collects royalties, and confidentiality. 67,118 works were before transferring relevant royalties registered online during 2015, an to Sacem for the repertoire that average of around 5,600 every month. it represents, which Sacem then distributes to its members. This type Members now also have access of agreement is often reciprocal, to a new reporting system relating with both authors’ societies being to their works, using tools capable of responsible for the other’s rights providing personalised and detailed within its jurisdiction. analysis of all media broadcasts for online services and the rights generated by their works.

A varied repertoire

Audiovisual Music Content > Music for video > Electro-music > Traditional > Editorials > Musical illustrations > Symphonic music > Poems of programmes music > World music > Humour > Musical documentaries > Jazz > Zouk > Dubbing > Advertising music > Song > Instrumental > Subtitles > Musical videos > Rap > Techno > Sketches > Reggae > RnB

30 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

19,100 members across all five continents

12% Of our members are from 164 countries outside France. 36% Europe 7% 5% North Middle 1.6% America East Asia 23% North Africa ••% 0.4% Pacific 18% 9% Africa South America

1.5.2. Our clients Collections from the media are Publishing International), our From hairdressers to streaming Sacem’s first source of revenue. collections rose by nearly 15%; platforms through audiovisual media Those from television and radio we can highlight in particular the and nightclubs, we initiated more remained stable despite the drop agreement with Apple signed in than 662,000 contracts in 2015 in pay television subscriptions and June 2015 for its new streaming with close to 500,000 highly diverse advertising revenue for traditional service which already has over clients. All have free and legal access channels, fortunately compensated 13 million subscribers worldwide, to works across all genres which by a rise in revenue for the new as this goes to press. are the basis of Sacem’s worldwide DTTV channels. Collections from The success of digital platforms repertoire. All have free and legal cable, ADSL and mobile television along with the progression of our access to around 100 million works, increased by 10%, thanks mainly pricing conditions, the simplification across the whole range of genres to regularisations. of licensing for moderate-sized that make up Sacem’s worldwide In 2015, streaming became the most services and applications using repertoire. By paying authors’ rights, widespread form of online use of music available on smartphones and client users of music are keeping music on the Internet. The number tablets, have contributed to this musical creation alive and of paying subscriptions for streaming growth and enable us to guarantee participating in its sustainability. services increased greatly this year. our leadership position in the very 1.5.3. Licences Borne by this momentum and the competitive digital environment. Total authors’ rights collected by signature of over 130 new contracts, the Licensing and International including 17 with international players Collections Department (not including for both Sacem’s direct repertoire mandates) rose by over 5% in 2015. and that of UMPI (Universal Music

ANNUAL REPORT 2015 | SACEM 31 Management report 1. General information continued

In this context, cooperation between societies has been reinforced within the Armonia licensing hub, headed 2,117,000 by Sacem. Firstly, the Portuguese society SPA joined at the end of Works on which authors’ rights 2015 as a new member, meaning were distributed in 2015. that Armonia now has nine members, with the Austrian society AKM also joining in 2016. Secondly, from a technical perspective, there has been strong take-up of the use of tools developed by BMAT to all our online clients, thereby improving automatic identification of works and accelerating processing time and royalty distribution. Top 20 hits abroad* 1.5.4. Our regional network Our extensive regional network is one No. Title Writer Publisher Artist of our most valuable assets in terms 1 Comme d’habitude C. François / J. Revaux / G. Thibaut / Nouv Barclay / Jeune Musique Éditions Claude François / Frank Sinatra / of delivering the very best for our P. A nka Paul Anka members. We have teams on the ground throughout France and 2 Prayer In C B. Cotto / N. Hadida / P. Guimard Choke Industry / Warner Chappell Music France Lilly Wood & The Prick feat Robin internationally comprising six regional Schulz remix hubs and more than 70 local offices, 3 La Vie En Rose E. Piaf / Louiguy Éditions Beuscher Édith Piaf enabling us to ensure accurate and efficient collection and to maintain 4 Roméo et Juliette Opus 64 S. Prokofiev Le Chant du Monde close relationships with our regional 5 Danza Kuduro F. Barkati / P. De Oliveira / F. Toigo / Hella Publishing / Together Publishing Ltd / Crown P Music Publishing / Don Omar feat. Lucenzo customers and members. Big Ali / W. Landron Emi Music Publishing France / Because Éditions By being in close touch with the 6 Papaoutai Stromae / L. Mandjeku / A. Ottignon Mosaert Stromae people who are playing music and 7 Les Feuilles Mortes J. Kosma / J. Prévert / J. Enoch Enoch Cie Yves Montand driving forward sustainable creativity, we are able to feel the pulse of the 8 Y M C A H. Belolo / J. Morali / V. Willis Black Scorpio Village People music business, sense the direction 9 Mr Saxobeat V. Prodan / A. Nemirschi Play On 911 Alexandra Stan the economy is heading, foresee 10 Run Boy Run A. Willaume / Woodkid Karakoid / Seize Zero Trois / Sony/ATV Music Publishing France Woodkid the issues that music creators and publishers are faced with, and be 11 I Gotta Feeling D. Guetta / F. Riesterer / Will I Am / What A Publishing Limited / Rister Éditions / Will I Am Music Inc / Cherry River Black Eyed Peas ready to best serve the interests S. Ferguson / J. Gomez / A. Pineda Music Co / Headphone Junkie Publishing Llc / Tab Magnetic Publishing / Jeepney of our members by adapting Music Inc / Bmg Rights Management / Emi Music Publishing France quickly to changing markets and circumstances. 12 Born To Be Alive P. Hernandez Saturn Patrick Hernandez 13 Jubel E. Catry / C. Steinmyller Klingande Music / Sony/ATV Music Publishing France Klingande 1.5.5. Private Copying Since being adopted in France 14 Hello M. Solveig / M. Sorbara Temps d’Avance / Emi Music Publishing France / Dragonette Publishing inc Martin Solveig / Dragonette in 1985 thanks to the Lang Law, 15 Brasil A. Barroso Vitale Irmaos Sa Industria E Comercio / Peermusic France the private copying levy has made it possible to compensate for the 16 Tableaux d’une Exposition M. Moussorgski (domaine public) / Hawkes And Son (London) Ltd loss of revenue suffered by creators M. Ravel as a result of the legal exception 17 Boléro M. Ravel Éditions Durand allowing private copies to be 18 Mas Que Nada J. B. Jor Peermusic do Brasil Edições Musicais Ltda made of their works. 19 Pierre Et Le Loup S. Prokofiev Le Chant du Monde Three-quarters of the levy paid by consumers purchasing recording 20 Voyage Voyage J.M. Rivat / D. Dubois Rivat Jean Michel Edit Desireless equipment such as hard drives, * Ranking of exports in 2015 for exploitation in 2014 USB flash drives and tablets is redistributed to creators, while the remaining 25% goes to supporting creation, live performances and vocational training.

32 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

“Wixen Music Publishing, Inc. was searching for an effective solution for Pan-European licensing for a few years. We made missteps with two other European societies that were not able to deliver the promised level of competency and service and cost us a lot of time and lost income. Our deal with Sacem has worked seamlessly and we have been impressed with their interest, patience, understanding, and technical competency which seems much greater than the other two societies we tried working with. The quality of the database has been impressive as well.”

Randall Wixen President/CEO and Company Founder Wixen Music Publishing, Inc.

Top 20 hits abroad*

No. Title Writer Publisher Artist 1 Comme d’habitude C. François / J. Revaux / G. Thibaut / Nouv Barclay / Jeune Musique Éditions Claude François / Frank Sinatra / P. A nka Paul Anka 2 Prayer In C B. Cotto / N. Hadida / P. Guimard Choke Industry / Warner Chappell Music France Lilly Wood & The Prick feat Robin Schulz remix 3 La Vie En Rose E. Piaf / Louiguy Éditions Beuscher Édith Piaf 4 Roméo et Juliette Opus 64 S. Prokofiev Le Chant du Monde 5 Danza Kuduro F. Barkati / P. De Oliveira / F. Toigo / Hella Publishing / Together Publishing Ltd / Crown P Music Publishing / Don Omar feat. Lucenzo Big Ali / W. Landron Emi Music Publishing France / Because Éditions 6 Papaoutai Stromae / L. Mandjeku / A. Ottignon Mosaert Stromae 7 Les Feuilles Mortes J. Kosma / J. Prévert / J. Enoch Enoch Cie Yves Montand 8 Y M C A H. Belolo / J. Morali / V. Willis Black Scorpio Village People 9 Mr Saxobeat V. Prodan / A. Nemirschi Play On 911 Alexandra Stan 10 Run Boy Run A. Willaume / Woodkid Karakoid / Seize Zero Trois / Sony/ATV Music Publishing France Woodkid 11 I Gotta Feeling D. Guetta / F. Riesterer / Will I Am / What A Publishing Limited / Rister Éditions / Will I Am Music Inc / Cherry River Black Eyed Peas S. Ferguson / J. Gomez / A. Pineda Music Co / Headphone Junkie Publishing Llc / Tab Magnetic Publishing / Jeepney Music Inc / Bmg Rights Management / Emi Music Publishing France 12 Born To Be Alive P. Hernandez Saturn Patrick Hernandez 13 Jubel E. Catry / C. Steinmyller Klingande Music / Sony/ATV Music Publishing France Klingande 14 Hello M. Solveig / M. Sorbara Temps d’Avance / Emi Music Publishing France / Dragonette Publishing inc Martin Solveig / Dragonette 15 Brasil A. Barroso Vitale Irmaos Sa Industria E Comercio / Peermusic France 16 Tableaux d’une Exposition M. Moussorgski (domaine public) / Hawkes And Son (London) Ltd M. Ravel 17 Boléro M. Ravel Éditions Durand 18 Mas Que Nada J. B. Jor Peermusic do Brasil Edições Musicais Ltda 19 Pierre Et Le Loup S. Prokofiev Le Chant du Monde 20 Voyage Voyage J.M. Rivat / D. Dubois Rivat Jean Michel Edit Desireless

* Ranking of exports in 2015 for exploitation in 2014

ANNUAL REPORT 2015 | SACEM 33 Management report 1. General information continued

Top 20 rights in France**

€457.0m No. Title Writer Publisher Artist Collected as a result of mandates from other collective 1 Happy P. Williams Universal Pictures Music / More Water From Nazareth Publishing Inc / Emi April Pharrell Williams societies and publishers. Music Inc / Universal Mca Music Publishing / Emi Music Publishing France 2 A Sky Full Of Stars T. Bergling / G. R. Berryman / Universal Music Publishing Mgb Limited / Universal Music Publishing Mgb France / Coldplay J.M. Buckland / W. Champion / C. Martin Emi Music Publishing France 3 Papaoutai Stromae / A. Ottignon / L. Mandjeku Mosaert Stromae 4 Tous Les Mêmes Stromae Mosaert Stromae 5 Sur Ma Route P. Koeu / A. Diallo / A. Diallo Wati B Editions / Universkalp Black M Private Copying has been under 6 Magic In The Air S. Traore / N. Sodoua / K. Boue Bi / Emi Music Publishing France / Gaou Productions Multivision / Ole 2101 Songs / Magic System feat Chawki attack by certain equipment A. Fanny / J. Maman / B. Hajji / Songs Of Redone / Sony/ATV Songs Llc / Ole Media Management Lp / Sony/ATV importers who continue to seek to A. Papaconstantinou / A. Khayat / Music Publishing France dismantle this system in France and K. Nadir the rest of Europe. Sacem remains 7 Prayer In C B. Cotto / N. Hadida / P. Guimard Choke Industry / Warner Chappell Music France Lilly Wood & The Prick feat dedicated, alongside other authors’ Robin Schulz remix societies, to preserving it across 24 countries in the European Union. 8 Ave Cesaria A. Cotentin / Stromae / J. Mauricio / Mosaert Stromae In this regard, it welcomes the C. Aissahine / M. Del Gado resumption of the works at the end 9 Dernière Danse Dj Skalp / Indila / K. Deneyer Universkalp / As Publishing Indila of the year by the Joint Committee 10 Formidable Stromae / L. Capouillez Mosaert Stromae bringing together importers, consumer representatives and 11 Ta Fête Stromae Mosaert Stromae beneficiaries, which is the source 12 Get Lucky T. Bangalter / G. Homem Christo / Because Editions / Daft Music / More Water From Nazareth Publishing Inc / Daft Punk feat Pharrell Williams, of all industry developments. G. Rodgers Nile / P. Williams Xlc Music Nile Rodgers The private copying levy is of crucial 13 Wake Me Up A. Blacc / Avicii / M. A. Einziger Elementary Particle Music / Emi Music Publishing Scandinavia Ab / Triomega / Avicii feat Aloe Blacc importance, being a guarantee of Universal Music Corporation cultural diversity and our country’s 14 Stolen Dance C. Rehbein Sony/ATV Music Publishing France Milky Chance artistic vitality. 15 Liar Liar A. Dallas L / P. Williams / C. Cabrerizo / Black Owned Musik / Emi Blackwood Music Inc / Rowdy Man Music / Emi April Cris Cab 1.6. Mandates W. Robert G Music Inc / More Water From Nazareth Publishing Inc / Sony/ATV Allegro / We also collect royalties for: Anonymous Hippopotamus / Emi Music Publishing France / Sony/ATV Music • Artists-singers and producers of Publishing France music, audiovisual works, visual 16 Love Never Felt So Good P. Anka / M. Jackson Paulanne Music Inc / Mijac Music / Premiere Music Group / Sony/ATV Music Michael Jackson, arts and writing via Copie France Publishing France Justin Timberlake (Private Copying). 17 Instant Crush T. Bangalter / G. Homem Christo / Because Editions / Daft Music / Warner Chappell Music Publishing Limited / Daft Punk feat Julian • Artists-singers (members of the J. Casablancas Warner Chappell Music France Casablancas Adami and Spedidam collective societies) and record producers 18 Le Jour Qui Se Rêve F. Chateau / L. Florence / P. Guirao Sony/ATV Music Publishing France / Mademoiselle Aya / Musicalco / Dooble Aa M. Pokora (SCPP and SPPF) for the 19 Batard Stromae / T. Azier Mosaert Stromae broadcasting of their works 20 All Of Me G. Tobias / J. Legend Gadfly Songs / Atlas Holdings / John Legend Publishing / Kobalt Music Publishing John Legend in public places such as shops Limited / Bmg Rights Management (France) and nightclubs. • Authors of the performing arts, ** Ranking based on authors’ rights distributed in 2015 audiovisual works (members of SACD), multimedia works (members of Scam) and graphic and plastic arts (members of ADAGP) for part of media broadcasting of their works (especially audiovisual). • International music publishers (Universal Music Publishing, Wixen Music Publishing, Inc. and Sharandall Music) for part of digital use of their international repertoires.

34 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Top 20 rights in France**

No. Title Writer Publisher Artist 1 Happy P. Williams Universal Pictures Music / More Water From Nazareth Publishing Inc / Emi April Pharrell Williams Music Inc / Universal Mca Music Publishing / Emi Music Publishing France 2 A Sky Full Of Stars T. Bergling / G. R. Berryman / Universal Music Publishing Mgb Limited / Universal Music Publishing Mgb France / Coldplay J.M. Buckland / W. Champion / C. Martin Emi Music Publishing France 3 Papaoutai Stromae / A. Ottignon / L. Mandjeku Mosaert Stromae 4 Tous Les Mêmes Stromae Mosaert Stromae 5 Sur Ma Route P. Koeu / A. Diallo / A. Diallo Wati B Editions / Universkalp Black M 6 Magic In The Air S. Traore / N. Sodoua / K. Boue Bi / Emi Music Publishing France / Gaou Productions Multivision / Ole 2101 Songs / Magic System feat Chawki A. Fanny / J. Maman / B. Hajji / Songs Of Redone / Sony/ATV Songs Llc / Ole Media Management Lp / Sony/ATV A. Papaconstantinou / A. Khayat / Music Publishing France K. Nadir 7 Prayer In C B. Cotto / N. Hadida / P. Guimard Choke Industry / Warner Chappell Music France Lilly Wood & The Prick feat Robin Schulz remix 8 Ave Cesaria A. Cotentin / Stromae / J. Mauricio / Mosaert Stromae C. Aissahine / M. Del Gado 9 Dernière Danse Dj Skalp / Indila / K. Deneyer Universkalp / As Publishing Indila 10 Formidable Stromae / L. Capouillez Mosaert Stromae 11 Ta Fête Stromae Mosaert Stromae 12 Get Lucky T. Bangalter / G. Homem Christo / Because Editions / Daft Music / More Water From Nazareth Publishing Inc / Daft Punk feat Pharrell Williams, G. Rodgers Nile / P. Williams Xlc Music Nile Rodgers 13 Wake Me Up A. Blacc / Avicii / M. A. Einziger Elementary Particle Music / Emi Music Publishing Scandinavia Ab / Triomega / Avicii feat Aloe Blacc Universal Music Corporation 14 Stolen Dance C. Rehbein Sony/ATV Music Publishing France Milky Chance 15 Liar Liar A. Dallas L / P. Williams / C. Cabrerizo / Black Owned Musik / Emi Blackwood Music Inc / Rowdy Man Music / Emi April Cris Cab W. Robert G Music Inc / More Water From Nazareth Publishing Inc / Sony/ATV Allegro / Anonymous Hippopotamus / Emi Music Publishing France / Sony/ATV Music Publishing France 16 Love Never Felt So Good P. Anka / M. Jackson Paulanne Music Inc / Mijac Music / Premiere Music Group / Sony/ATV Music Michael Jackson, Publishing France Justin Timberlake 17 Instant Crush T. Bangalter / G. Homem Christo / Because Editions / Daft Music / Warner Chappell Music Publishing Limited / Daft Punk feat Julian J. Casablancas Warner Chappell Music France Casablancas 18 Le Jour Qui Se Rêve F. Chateau / L. Florence / P. Guirao Sony/ATV Music Publishing France / Mademoiselle Aya / Musicalco / Dooble Aa M. Pokora 19 Batard Stromae / T. Azier Mosaert Stromae 20 All Of Me G. Tobias / J. Legend Gadfly Songs / Atlas Holdings / John Legend Publishing / Kobalt Music Publishing John Legend Limited / Bmg Rights Management (France)

** Ranking based on authors’ rights distributed in 2015

ANNUAL REPORT 2015 | SACEM 35 Management report 1. General information continued

Private Copying – audio Accuracy and efficiency Surveys carried out by audience measurement companies provide us with information on the sources ■ 80% from which copies have been made, work-by-work such as radio, CDs and downloads. Sacem holds the resulting royalties ■ 11% for distribution. by surveys From creation to distribution, we provide support to those who are ■ 9% involved in the diversity and vitality by taking into account of artistic life in France and consumer habits internationally. Private Copying – audiovisual Authors’ rights are matched as accurately and efficiently as possible to the actual use of the works. Surveys have shown that most copies are made from television, and Sacem collects the authors’ rights from TV channels for distribution. 1.7. Distribution Cinemas Internet and audiovisual media Authors’ rights collected in respect Consumer habits operators also send reports to Sacem of films are allocated to each musical Background music listing all the works that are broadcast work based on the duration of use Any works reproduced on CD and in a given period. Thanks to its in the film. selling 500 copies are registered for regional network, Sacem monitors a period of 10 years in a specific file. CD or DVD all programmes of broadcast or To participate in authors’ rights The number of units produced reproduced works to a very high distributions in this area, the works and their retail price allow us to level of accuracy. Sacem uses this of this file need to have been played determine the level of authors’ rights data and intelligence to collect and in concert, at a ball or broadcast to be allocated. distribute authors’ rights. Close on radio. to 80% of the authors’ rights are Internet International distributed work-by-work in order Identifying the source of each Royalties for works played abroad are to reflect, as much as possible, the work downloaded or listened to by collected and distributed according reality of the music broadcasting platform, by territory and allocating to the rules of the rights societies detailed programmes. This accuracy the rights attributable to it, is based in each country. The procedure is the result of the considerable on the number of downloads or for distribution of data exchange technological innovation and plays(1) and on the total number of between societies is agreed in expertise needed to process large downloaded or listened-to works. contracts between them and follow volumes of data, while at the same international standards set by Cisac, time providing reliable documentation. Surveys Live dance events the International Confederation Work-by-work For live dance events, rights collected of Authors and Composers. The Audiovisual are distributed on the basis of sample royalties are then paid by Sacem Authors’ rights relating to TV or radio repertoires provided by member to its members. stations are recorded in statements, conductors every half year when and are based on how many seconds they liven up the dance event. the broadcast lasts for. For other dance events, distribution Concerts and shows rates are calculated on the basis of All authors’ rights collected for 150 half-yearly listenings, which are shows and concerts are distributed converted into statistical statements based on the duration of the works of the music played. performed. If this information is not Nightclubs available, rights are divided according Rights collected from nightclubs are to the duration of the work indicated distributed on the basis of a sample by its creators. survey conducted every week by a specialised company with a panel of 110 clubs. Data collected is used to establish detailed statistical statements of the (1) On condition the amount of rights is music being played. above a threshold taking into account the cost and complexity of the necessary operations.

36 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

1.8. Technology At the same time, we need to maintain We have innovative new technologies strong relations and dialogue with in place to efficiently enhance royalty all the key players in the royalties collection in an increasingly digital chain globally. This is why we actively 293,000 and globalised world. participate in the work of DDEX Songwriters, composers, music (Digital Data Exchange) and publishers – members of Sacem In practical terms, we have separated FastTrack whose ongoing mission is or of other collective societies in the hardware which processes online to deliver broadly adopted solutions France and throughout the world activities from that which processes that facilitate the international who have benefited from the the royalties from the traditional exchange of information in the music royalties paid by Sacem in 2015. medias. We use big data industry enabling timely, accurate technologies such as Cassandra, and efficient compensation to rights Elastic Search and Hadoop to owners. We are also contributing to increase our processing capacity. a new strategy for FastTrack and In 2015, we processed nearly 5 billion Cisac to produce a coherent and usage report lines to distribute value comprehensive global picture of from 589.4 billion download and works and their copyright holders. streaming transactions, more than Besides the improved collection twice the 2014 total. This explosion technology, we have also enhanced is one of our key technological the IT services for our members. challenges. It is a consequence So, through the Sacem new portal, of the fragmentation of audiences they can register all their new works and services, the development of online and have direct access to streaming and the globalisation of comprehensive data which have online activity. This significant growth been taken into consideration for in volume is often accompanied by distribution purposes. a drop in the quality of the data being transmitted by broadcasters and Elsewhere, we are seeing a wider online services. development of the practice of mash-up and consumption of music Another key challenge is the ability content via User-Generated Content. to process data relating to the works Consequently, despite the advanced that we represent from any internet nature of the technology that they service in the world which provides use to recognise the works, UGC music and audiovisual content. platforms are not always successful Over the last few years we have in identifying them. Sacem and other been working to improve our online members of Armonia (Sacem music invoicing systems, as well as Luxembourg, Sgae, Siae, Artisjus, overhauling our documentation and Sabam, Suisa and SPA) have distribution systems. These efforts conducted tests with their partner, have already reaped rewards: today, the Spanish society Bmat, on 50,000 for example, report files are analysed videos representing 2 billion views, every month in order to invoice and revealing that 30% of videos distribute royalties on a work-by-work contained several dozens of works basis. We are also increasing the that had not been identified by speed at which we update our UGC platforms. documentation in France and across an increasing number of countries. With its modern technology, Sacem operates one of the most advanced and efficient collection and distribution models of all authors’ societies in the world.

ANNUAL REPORT 2015 | SACEM 37 Management report 1. General information continued

Cultural Aid in 2015 €24.6m ■ ■ To support cultural activities 36% 7% (€22.1m 25% Private Copying Creation and production Optimisation activities and €2.5m voluntary aids). ■ 39% ■ 10% Live performances Operating costs ■ 8% Artist training

1.9. Cultural aid In 2015 we focused on supporting In addition to collecting and and optimising a range of existing distributing authors’ rights, Sacem programmes, as well as widening runs support programmes for musical the eligibility criteria for investment, creation, live performance and in order to better satisfy the needs professional training for young of creators and their professional creators through cultural initiatives. environment and players in the We provide direct support to sector. Significant changes included authors and composers – aid re-looking at international cultural for self-production, residence support, the reform of our programmes, career support, programme for preproduction grants – and publishers, as well as funding, and the development of broadcasters, concert halls, festivals a new strategy for supporting the and producers, who showcase and comedy genre. promote these artists. Pop, jazz, In addition, this year also saw the rock, contemporary music, world launch of La Fabrique à Chansons, music, urban music, electro, original which met with immediate acclaim soundtracks, poetry, comedy: all the by songwriters, with 1,022 repertoires managed by Sacem applications and the support of the benefit from these funds. Sacem also two relevant ministries – Education undertakes cultural projects designed and Culture – and the appointment to promote artistic education for of External Relations and Cultural young creators and audiences, and Activity Managers across Sacem’s cultural projects designed with the six regional offices. aim of sharing works and making them more accessible to wider At the same time, the analysis audiences, with special attention of creators’ needs in the digital going to repertoires with poor environment remains a priority. media coverage. Pilot digital and cross-media projects have been undertaken with the At the same time, Sacem also spent objective of encouraging the take-up €1.9 million in 2015 through grants of repertoires across all television, to support 2,901 songwriters, radio and online channels. composers, poets and publishers across instrumental, electroacoustic, Our objectives for 2016 are to work jazz, and symphonic music and song. with music industry professionals to find alternative ways to finance activities, to expand and develop our audiences and to identify and support new opportunities and initiatives.

38 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

1.11. Legal framework In 2015, as well as Sacem’s operations are subject to Cultural projects in 2015 increasing grants the Code of Intellectual Property and to a range of internal and external for existing projects, controls. At European level, a 2005 recommendation on copyright 1,820 we focused on management led to a fragmentation cultural aid projects supported broadening the range of repertoires forcing online music (over 3,478 projects submitted) platforms to multiply requests for of programme criteria. authorisation of their activities. The Among them: increased complexity of the market is partly responsible for the Directive on Collective Management adopted 175 in 2014. It reflects primarily a desire pre-production funding projects to improve the governance and transparency of national and other European rights management companies by strengthening 785 disclosure requirements and control concert halls and festivals 1.10. Human resources of their activities by the rights holders. With 1,347 employees at the end of These provisions – already widely 2015, Sacem’s teams are structured adopted in France – will enable around each of our core business greater harmonisation of the 137 activities, membership management, rules across all the European training courses (including admission and works rights companies. registration), collections (including For single copyright organisations our regional network and licensing), in the music industry, and therefore and support services including for Sacem, the Directive also aims innovation, communication and to facilitate the delivery of cultural activities, legal, IT, finance multi-repertoire and pan-European and human resources. The teams licenses for the use of online music are employed in over 70 locations works. Through various specific across France and overseas. initiatives, Sacem has campaigned Our human resources policy for many years to improve the market is designed to support the for online music, be it through implementation of Sacem’s strategy. national licenses to operate online rights, multi-territory licenses to use It therefore focuses on how we work entire repertoires, or through the and putting effective structures Armonia platform developed in in place which reflect the evolving partnership with other European nature of our business, ensuring authors’ rights organisation. that employees have the right skills and tools, vocational training and on ongoing internal and external dialogue. In 2015, specific activities have been initiated to share and to better apply the strategy to all employees. Beyond the regular team meetings and seminars throughout France, we have developed a customised programme in partnership with ESCP-Europe, a leading European business school, using innovative teaching methods, for managers to deepen their ability to develop strategic initiatives, and to encourage active participation across our bespoke in the implementation of our business plan and in our general development.

ANNUAL REPORT 2015 | SACEM 39 Management report 2. Economic position

2.1. Market environment The growing range of digital devices 2015 was marked by a serious available to consumers has created recovery in the music industry after new opportunities to access music. a 10-year crisis. Digital revenues now Social networks also play an exceed physical ones (45%-39%) increasingly important role in the particularly due to the strong increase exchange of musical content. in streaming (+45% in 2015). The deployment of data processing Streaming will soon exceed tools with the right technologies to downloading which continues to collect and distribute royalties in this decline. The market leader, Spotify environment are essential for today’s continued to grow in 2015 and the collective management and for Sacem. IFPI identified no fewer than 400 digital music platforms worldwide. The management of usage data such as music metadata is an active Related rights linked to broadcasting element in the future of collective and sound systems in public places management. This is also why accounted for the remaining 14% Sacem has invested heavily in the of music industry revenues last year. development of collaborative For Sacem, new services and video platforms, new services for our platforms that can be accessed members and data access initiatives. through various digital devices are new opportunities for growth. While Sacem’s digital royalties continue to increase, radio and television broadcasts are still the primary source of royalties for the society. With the economic crisis and the contraction in advertising investment, historically free channels have experienced a slight decline since the early 2010s while catch-up television continues to grow. Authors’ rights collected by Sacem’s regional network (general rights) and particularly the revenue from tours, concerts and those from playing music in a public place rose in 2015.

40 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

2014 figures have been restated compared to 2014 annual report issued last year in order to consolidate Sacem Luxembourg which collects authors’ rights in the Grand Duchy of Luxembourg and is a 75% Sacem’s and 25% SDRM’s subsidiary. 2.2. Financial performance 2.2.1. Key figures

M€ 2015 2014 Var Var % Collections Sacem author’s rights collections 862.2 829.7 32.6 3.9% Mandates & other collections 4 57.0 455.2 1.8 0.4%

Net expenses to be financed through deductions -150.0 -152.5 2.5 -1.7% Operating expenses -196.5 -194.7 -1.9 1.0% Other operating income 3.0 3.4 -0.4 -11.1% Interest and other income 36.6 38.4 -1.8 -4.7% Net non recurring income 6.9 0.3 6.6 1935.6%

Variation in distribution reserves 15.8 -26.3 42.1 -160.1% Variance on the reserve of net result 18.8 -17.1 35.9 -209.6% Variance on the suspense accounts -3.0 -9.2 6.2 - 67.6 %

Distribution of Sacem author’s rights -733.6 -686.5 - 47.0 6.9% In favour of Sacem members - 587.0 -553.4 -33.6 6.1% – Distribution to Sacem members -538.1 -506.9 -31.1 6.1% – Social and cultural programmes -48.9 -46.4 -2.5 5.3% In favour of other collecting societies -121.2 -110.6 -10.7 9.7% In favour of cultural aid projects (25% Private copying levy) -25.4 -22.6 -2.8 12.2% Distribution of Mandates & other -451.5 -419.6 -31.9 7.6 % – Mandators -443.1 -412.4 -30.7 7.4% – Foreign and French collecting societies (non Sacem) -8.4 -7.1 -1.2 17.2%

Surplus/Deficit 0 0

ANNUAL REPORT 2015 | SACEM 41 Management report 2. Economic position continued

2.2.2. Collections Royalties relating to mandates – French collective societies The collecting operations managed granted to Sacem by the following: commissioning Sacem with by Sacem and its employees can the collection of a part of their – French collective societies be divided into two categories: neighbouring royalties benefiting from Private Copying (1) Sacem collections – French collective societies – Record labels who have Royalties relating to Sacem’s commissioning Sacem with entrusted Sacem with the repertoire (contribution of Sacem the collection of a part of their centralised collection for some members) or the repertoires of TV/Radio royalties. of their foreign subsidiaries foreign collective societies with a reciprocity contract. These – Publishers who have granted collections amounted to Sacem a multi-territory licence €862.2 million in 2015 and for online utilisation can be found in Sacem’s statutory accounts.

(2) Mandates

M€ 2015 2014 Var Var % Sacem 862.2 829.7 32.6 3.9% TV/Radio (including cable, satellite, ADSL operators) 326.2 320.4 5.8 1.8% General rights (regional network) 284.2 280.7 3.4 1.2% International 82.1 76.4 5.8 7.6 % Private Copying Sacem repertoire 78.0 64.8 13.2 20.3% CD/DVD/BRD 52.3 56.7 -4.4 -7.8 % Online 39.5 30.6 8.9 29.0% Mandates and others 4 57.0 455.2 1.8 0.4% Private Copying non-Sacem repertoire 185.6 163.9 21.7 13.2% Other mandates 249.7 262.2 -12.6 -4.8% Miscellaneous 21.7 29.0 -7.3 -25.3% Total 1,319.2 1,284.9 34.3 2.7%

Revenue breakdown ■ 25% ■ 6% ■ 14% (2014: 25%) (2014: 5%) (2014: 13%) TV/Radio (including cable, Private Copying Non-Sacem Private satellite, ADSL operators) Sacem repertoire Copying repertoire ■ 22% ■ 4% ■ 19% (2014: 22%) (2014: 4%) (2014: 20%) General rights CD/DVD/BRD Other mandates (regional network) ■ 6% ■ 3% ■ 2% (2014: 6%) (2014: 2%) (2014: 2%) International Online Miscellaneous

42 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Total collections increased by – An increase by 6.1% of live Collections from mandates and €34.3 million, 2.7% up compared to concerts revenues due to strong others lightly increased by €1.8 2014, amounting to €1,319.2 million concerts by tour promoters and million, or 0.4%, mainly due to two at the end of 2015. to festivals; opposed effects: increase of Private Copying for non Sacem repertoire The different types of Sacem – Elsewhere, the nightclub sector for the same reasons as described collections grew by €32.6 million, saw its collections fall by 11% above for Sacem repertoire; no more or 3.9%, on a cumulated basis, with in comparison to 2014. collections for the SACD mandate the following single item variations: ■■ International collections grew by (first full year following the end ■■ TV/Radio collections (including €5.8 million, or 7.6% – these are of contract). broadcast by cable, satellite royalties collected from foreign and broadband) increased by collective societies for the use of €5.8 million, or 1.8% – these are the Sacem repertoire outside of the royalties paid by television France. Such reciprocal contracts (historical channels, TNT, theme- link up a large number of foreign based channels, and local collective societies with Sacem. channels) and radio channels The increase mainly relates to and by operators. The increase in Europe (among which cable these collections is mainly due to regularisations). remaining regularisation payments ■ following renegotiations with ■ Private Copying collections certain ADSL operators. Media for Sacem repertoire increased collections, mainly based by €13.2 million, or 20.3%, upon advertising revenues, mainly due to a favourable decreased slightly. smartphones market and to some regularisations for past years. ■■ Collections by the regional ■ network (general rights) increased ■ CD/DVD/BRD collections by €3.4 million, or 1.2%. This decreased by €4.4 million, or includes royalties collected by 7.8% – these are royalties paid by the 70 delegations under the terms producers of physical audio (CD, of public broadcasting rights for vinyl, etc) or video (DVD, Blu-ray, shows and concerts, the use etc) media. The decrease in this of music in nightclubs, ambient source of income is mainly due to music in bars and amusement the structural decrease of the CD, parks, etc, and background DVD and Blu-ray markets. The music in stores, hotels, cafés, and physical recorded music business restaurants. These are referred fell by 15.9% in 2015 in France to as general rights. To be noted: (Source: SNEP). ■ – A favourable impact of ■ Online collections increased background music (+5.2%) by €8.9 million, or 29.0% – which represents 43% of general these are royalties collected rights, and which has benefited from Digital Service Providers from the high level of involvement or other online music users. The of teams developing this business market is growing globally even in the field and improving the though it is currently undergoing payment of receivables; structural change, with the growing predominance of audio streaming and VOD/SVOD over downloadings.

ANNUAL REPORT 2015 | SACEM 43 Management report 2. Economic position continued

2.2.3. Net expenses

M€ 2015 2014 Var Var % Personnel expenses -134.6 -133.5 -1.1 0.8% Other operating expenses -48.4 - 47.9 -0.6 1.2% Depreciation and amortisation -13.5 -13.3 -0.2 1.6% Operating expenses -196.5 -194.7 -1.9 1.0% Other operating income 3.0 3.4 -0.4 -11.1% Net financial income 36.6 38.4 -1.8 -4.7% Net non recurring income 6.9 0.3 6.6 1,935.6% Net expenses -150.0 -152.5 2.5 -1.7% Net operating expenses ratio -11.4% -11.9%

Personnel expenses increased by €1,1 million, or 0.8%, including an impact on variable pay triggered by the exceptional performance on collections and distribution in 2015. The headcount decreased by 6 from 1,353 to 1,347 in 2015. Other operating expenses were mainly made up of overhead expenses for the head office and the regional network through its local offices throughout France (rent, mail, printing, taxes and duties, maintenance, security, utilities, etc), operational expenses linked to information systems (application maintenance, IT technicians, etc), fees, training and communication expenses, etc. The increase in operating expenses amounted to €0.6 million was largely due to temporary rents during the headquarter building renovations started in 2015. The increase in net amortization reflects the growing IT investments over the past three years for the global information system modernization project, in particular related to the distribution process and the online one. The net non recurring income amounts to €6.9 million in 2015 and especially includes the disposal of real estate. The net operating ratio decreased from 11.9% to 11.4% between 2014 and 2015, mainly due to the latter net non recurring impact.

44 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

2.2.4. Outstanding royalties in the The decrease in the suspense 2.2.5. Attributed royalties balance sheet accounts for royalties to be The increase in attributions granted The consolidated reserve of net result distributed between 2014 and 2015 by Sacem to its members (+6.1%) in the amount of €3.0m in 2015 stems (€35.9 million) was due to the and to foreign or French collective mainly from: combination of two effects: societies (+9.7%), is a direct consequence of the growth of ■■ Sacem’s financial statements. ■■ Decrease of Sacem suspense distributable amounts (7.1%), mainly It enables Sacem to respect the accounts: improvement of justified by the exceptional level statutory rule for a balanced result, distribution quality especially of Sacem collections (+3.9%) and reserves being capped at ±5% regarding TV rights; to the fall of Private Copying and of the yearly expenses. The actual ■ TV rights suspense accounts. reserves ratio was 2.7% at the ■ Decrease of Copie France suspense accounts: Copie France end of 2015; The increase of attributions to collected regularisations in mandators (+7.4%) stems from the ■■ SDRM’s financial statements. December 2014 to be distributed collections increase for Private Indeed SDRM disposed of real only the following month in Copying and other mandates and estate, hence the non recurring January 2015. So 2014 Copie from the regularisations booked as income reported in SDRM France suspense accounts were mandates collections in 2014 but accounts generating a positive exceptionally high due to the distributed in 2015. result for 2015. one-month delay between collection and distribution by Copie France.

ANNUAL REPORT 2015 | SACEM 45 Management report 2. Economic position continued

2.2.6. Social and cultural aids Sources of income and uses of funds (for social and cultural aid)

M€ 2015 2014 Var Var % Collection of royalties attributed to social and cultural aid(1) 48.9 46.4 2.5 5.3% Collection of royalties attributed to Optimisation Funds(2) 1.9 1.7 0.2 10.2% Other sources of income 0.9 0.6 0.3 56.6% Total revenues 51.7 48.7 3.0 6.1% Contingency Funds 30.1 29.9 0.2 0.8% Solidarity Funds 1.8 1.7 0.1 4.2% Voluntary Cultural Aid – Optimisation Funds(2) 1.9 1.7 0.2 10.2% Voluntary Cultural Aid – Non-Optimisation Funds(3) 0.6 0.9 -0.3 -35.0% Total expenses 34.4 34.2 0.2 0.5% Surplus of the fiscal year 17.3 14.5 2.8 19.2%

Sacem’s Articles of Association provide for the possibility of contingency, solidarity and assistance action in favour of its members and the payment of services in the framework of social aid. The financing of social and cultural aids is mainly done via: (1) The collection of certain royalties as highlighted in 2.2.1. – calculated as a percentage of the net collections withheld from royalties to finance operating expenses; this percentage can not statutorily exceed 10%. (2) The collection of royalties intended for Optimisation Funds, i.e. direct aid given to certain members via the mark-up of royalties which they have been paid. These Optimisation Funds support: ■■Jazz improvisers ■■Young pop authors and composers ■■The royalties generated by public performances or the recent recording of symphonic music, electroacoustic music, poetry, etc. In addition to the Optimisation Funds, there are other ‘voluntary’ cultural aid resources, i.e. outside the scope of the legal 25% Private Copying levy (see 2.2.7). (3) Non-Optimisation Funds voluntary cultural aid payments are mainly comprised of promotions for the broadcasting of music in French regions, support for artists wishing to self-produce their music, endowments to the winners of certain awards such as the Sacem Grands Prix, etc.

46 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

2.2.7. Cultural aids Sources of income and use funds (25% Private Copying levy for cultural aid)

M€ 2015 2014 Var Var % Collection of royalties attributed to cultural aid projects(1) 25.4 22.6 2.8 12.2% Financial sources of income 0.2 0.0 0.2 1,541.3% Total revenues 25.6 22.6 2.9 13.0% Aid for creation and production(2) 7.1 5.6 1.5 26.2% Aid for the realisation of live performances(2) 9.1 7.7 1.3 17.5% Aid for the training of artists(2) 1.9 1.5 0.4 28.0% Fund for the Creation of Music (FCM)(3) 1.6 1.3 0.2 16.9% Franco-American Cultural Fund (FACF)(4) 0.7 0.6 0.2 27.1% Overhead expenses 1.8 1.7 0.1 6.6% Total expenses 22.1 18.4 3.7 20.3% Surplus of the fiscal year 3.5 4.2 -0.8 -18.5%

The cultural aid paid by Sacem is financed partly by the budgets allocated to voluntary aid (see 2.2.6.) and partly by the sources of income provided for by Article L. 321-9 of the Intellectual Property Code. (1) These collections correspond to the royalties legally attributed to cultural aid. (2) The cultural aid payments are broken down between three legal categories as defined in Article R. 321-9 of the Intellectual Property Code, i.e. aid for creation and production, aid for live performances and aid for artists training (authors, composers and singers). (3) The subsidy paid to the Musical Creation Fund (FCM), an initiative financed by all the collective societies active in the musical field, can also be added to these spends. (4) The Franco-American Cultural Fund (FCFA) was created in 1996 with the aim of promoting the art of cinema on both sides of the Atlantic and to encourage dialogue between professionals in both countries. FCFA is financed via the 25% Private Copying levy, in agreement with the American professional guilds representing audiovisual creators (DGA, WGAW and MPA). The Cultural Action department has had increased sources of income for the past two years, with funds used for cultural aid increasing from €18.4 million in 2014 to €22.1 million in 2015. The main fields which benefited from these additional sources were: ■■ Funding to help entities whose activity linked to live shows endures difficulties following terrorist attacks in France (attendance levels fall, additional safety measures…); ■■ Funding in favour of young audiences or community actions; ■■ Funding for editorial pre-production; ■■ Activities in defence of authors’ rights (for example, the fight against piracy).

ANNUAL REPORT 2015 | SACEM 47 Financial statements Statutory auditor’s report on the financial statements Year ended December 31, 2015

To the Members, In our opinion, the financial These assessments were made statements give a true and fair view as part of our audit of the financial In compliance with the assignment of the assets and liabilities and of the statements taken as a whole, and entrusted to us by your Annual financial position of the Company at therefore contributed to the opinion General Meeting, we hereby report to December 31, 2015, and of the results expressed in the first part of you, for the year ended December 31, of its operations for the year then this report. 2015, on: ended in accordance with French 3. Specific verifications and ■■ the audit of the accompanying accounting principles. disclosures financial statements of Société des 2. Justification of our assessments In accordance with professional Auteurs Compositeurs et Editeurs In accordance with the requirements standards applicable in France, de Musique – Sacem; of Article L.823-9 of the French we have also performed the specific ■■ the justification of our assessments; Commercial Code (Code de verifications required by law. commerce) relating to the justification We have no matters to report as ■■ the specific verifications and of our assessments, we bring to your to the fair presentation and the disclosures required by law. attention the following matters: consistency with the financial These financial statements have been As part of our assessment of the statements of the information given in approved by the Board of Directors. accounting principles and methods the management report of the Board Our role is to express an opinion used by your company, we have of Directors and in the documents on these financial statements based verified the appropriateness of addressed to the shareholders with on our audit. these methods and the information respect to the financial position and 1. Opinion on the financial provided in the notes to the financial the financial statements. statements. Hereunder, we make statements Paris, April 15th 2016, We conducted our audit in the following clarifications: accordance with professional The section «Significant events» of standards applicable in France. the notes to the financial statements Cabinet Didier KLING & Associés Those standards require that we describes the method used for plan and perform the audit to obtain Didier KLING the Merger of “SESAM”. We have Anne NOUQUATI reasonable assurance about whether reviewed the terms of this operation the financial statements are free and their correct appropriateness Commissaires aux Comptes of material misstatement. An audit in Sacem’s financial statements. Compagnie de Paris involves performing procedures, Moreover, we worked to ensure that using sampling techniques or other this section of the notes to the methods of selection, to obtain financial statements provides an audit evidence about the amounts appropriate level of information. and disclosures in the financial statements. An audit also includes Your company collects from users evaluating the appropriateness of the rights related to the intellectual accounting policies used and property of the works of its members. the reasonableness of accounting As in previous years, we assessed estimates made, as well as the that the sums collected and overall presentation of the financial receivables recognized as assets statements. We believe that the have been allocated between the audit evidence we have obtained is members or have been registered sufficient and appropriate to provide as liabilities for the purpose of their a basis for our audit opinion. future distribution, for an amount net of statutory levies as the case may be.

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below in the opinion on the financial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the financial statements. This report also includes information relating to the specific verification of information given in the management report. This report should be read in conjunction and construed in accordance with French law and professional auditing standards applicable in France. Sacem 225, Avenue Charles de Gaulle 92521 NEUILLY SUR SEINE

48 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Financial statements Income and expenses statement

2015 2014 €000 €000 Operating income Other operating income 25,748 26,039 Deductions 145,852 146,072 Reversal of provisions 1,925 1,911 Transfer of expenses 1,659 1,740 Total I – Operating income 175,184 175,762 Operating expenses Purchases and other external expenses 48,513 46,953 Taxes and duties 5,915 6,444 Personnel expenses 134,137 133,023 Amortisation and depreciation 14,912 12,945 Net provisions 452 2,214 Other operating expenses 3,804 3,795 Total II – Operating expenses 207,73 3 205,375 Operating result (I – II) -32,549 -29,613 Financial income From shareholdings 5,075 4,880 Marketable securities 33,633 34,524 Total III – Financial income 38,708 39,404 Total IV – Financial expenses 0 0 Financial result (III – IV) 38,708 39,404 Net income from ordinary activities (I – II + III – IV) 6,159 9,790 Non recurring income 2,997 232 Total V – Non recurring income 2,997 232 Non recurring expenses 3,363 1,505 Total VI – Non recurring expenses 3,363 1,505 Non recurring result (V – VI) -366 -1,273 Total income (I + III + V) 216,889 215,398 Total expenses (II + IV + VI) 211,096 206,881 Excess of management levies at 31 December 5,793 8,517

ANNUAL REPORT 2015 | SACEM 49 Financial statements Balance sheet

Amortisation and depreciation (to be 2015 2014 Gross deducted) Net Net Assets €000 €000 €000 €000 Fixed assets Intangible assets: 112,621 69,657 42,964 41,474 Concessions, patents, licences, brands, processes, softwares 102,518 69,657 32,861 28,184 Advance payments and instalments 10,103 0 10,103 13,290 Property, plant and equipment: 122,201 86,791 35,410 38,377 Land 557 0 557 557 Buildings 59,624 35,164 24,460 27, 29 4 Other tangible assets 61,021 51,627 9,394 10,024 Advance payments and instalments 999 0 999 503 Financial investments: 29,702 0 29,702 29,325 Shareholdings 10,645 10,645 10,645 Long term receivables from investments 12,510 12,510 12,577 Loans 5,998 5,998 5,889 Other financial assets 549 549 214 Total I – Fixed assets 264,524 156,448 108,076 109,176 Current assets Receivables: 251,150 1,900 249,250 258,294 trade receivables 209,059 0 209,059 199,336 Other receivables: Members 28,860 1,900 26,960 29,495 Other operating receivables 3,154 0 3,154 3,235 Sundry debtors 10,077 0 10,077 26,227 Marketable securities 817,182 1,732 815,450 830,094 Cash and cash equivalents 226,067 0 226,067 161,569 Total II – Current assets 1,294,399 3,632 1,290,767 1,249,957 Accruals Prepaid expenses 2,331 2,331 2,241 Insufficiency of management levies at 31 December 0 0 0 Total III – Accruals 2,331 0 2,331 2,241 Total assets (I + II + III) 1,561,254 160,080 1,401,174 1,361,373

50 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

2015 2014 Liabilities €000 €000 Equity Capital 12,453 11,955 Total I – Equity 12,453 11,955 Provisions Provisions 3,080 2,759 Total II – Provisions 3,080 2,759 Debt Bank loans and debts 213 0 Deposits received (gifts and bequests) 3,139 3,001 Collections to be distributed 788,535 788,049 Users – foreign societies 7,774 5,570 Non-paid notified rights 164,236 155,939 Members 38,869 36,115 Trade payables and related accounts 8,772 10,020 Tax and social security debts 67,4 8 3 64,000 Other debt 26,212 21,609 Excess of the social aid of members’ fund 254,518 237,19 4 Cultural aid (25% Private Copying levy) 20,097 16,645 Total III – Debt 1,379,848 1,338,143 Accruals Excess of management levies at 31 December 5,793 8,517 Total IV – Accruals 5,793 8,517 Total liabilities (I + II + III + IV) 1,401,174 1,361,373

ANNUAL REPORT 2015 | SACEM 51 Financial statements Notes to the financial statements

Accounting rules and principles (c) Investments (h) Non recurring result Sacem annual accounts were drawn Investments appear in the balance Income and expenses which are not, up in accordance with the legislative sheet at their purchase cost. If by their nature, their occurrence, and regulatory provisions in force in their current value is less than their or their significant character, part France, notably those of the National purchase cost then an impairment of Sacem’s ordinary activities, are General Chart of Accounts (ANC cost will be recognised. booked as non recurring items. regulations No. 2014-03) subject (d) ‘User’ receivables (i) Non-balance sheet commitments to the specific provisions prescribed Receivables are booked at their ‘Retirement package’ commitments by Article R. 321-8 of the Intellectual nominal value. Receivables in which are determined according to the Property Code and Notice No. there is risk of non-recovery will not ‘projected credit units’ method. 2008-04 of 6 March 2008 of CNC. be depreciated as their royalties are Main accounting rules and only paid to the rightholders after principles their prior cash collection. Thus, (a) Intangible assets in the event of insolvency, the Software is booked at its purchase receivables will be offset by the value or, when it is created in-house, ‘notified uncollected royalties’ at a conservative assessment of account without any impact on its production cost. the profit or loss. The amortisations are calculated (e) Other receivables according to the straight-line method Receivables are booked at their over 2, 3, 4 or 5 years depending nominal value. Impairments are on the likely duration of use. constituted at the amount of the estimated risk. They mostly concern (b) Tangible assets member debit accounts which are Tangible assets are assessed at their no longer receiving any royalties. purchase cost (purchase price and incidental expenses). (f) Marketable securities The portfolio is mainly composed Since fiscal year 2013, it has been of bonds and traded debt securities decided to record the expenses which are easily convertible into cash related to the purchase of assets amounts. These are held to maturity. in the balance sheet, and to write Accordingly, this portfolio is held them off over the duration of the in treasury and no impairment respective item. is recognised on the basis of the The depreciation is calculated market price. according to the straight-line method For information purposes, the depending on the likely duration potential capital losses of financial of use: assets at 31 December 2015 were ■■ Buildings – 30 years. €7,854,700 and the potential capital gains were €66,729,267. ■■ Office equipment and installations – 3, 4, 5, 10 or 20 years. (g) Provisions Sacem books the following long-term ■■ Transport equipment – 5 years. social commitments in the balance ■■ Furniture and office supplies – sheet liabilities: 2, 3, 4, 5 or 10 years. ■■ Employee’s length of service ■■ IT equipment – 2, 3, 4 or 5 years. awards: accompanied by the payment of a bonus for 20 and ■■ Equipment which has a unit value 30 years of service. The provision less than €500 (excluding taxes), is determined according to the is booked in the fiscal year’s ‘projected credit units’ method. expenses. The other provisions relate to specifically identified contingencies and expenses.

52 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Highlights from the b) Works carried out at the Head c) Works carried out on the La Villette accounting year Office building in Neuilly building Restructuring and refurbishment Restructuring and refurbishment a) Universal Transferal of Assets work on several storeys of the work on several storeys of the from Sesam to Sacem building housing the Head Office building located at 16 Place de la On 1 January 2015, Sesam located at 225 Avenue Charles de Fontaine aux Lions, 75019 Paris, proceeded with the Universal Gaulle in Neuilly began in 2015 and began in 2015 and was completed Transfer of its Assets to Sacem, will continue in 2016. at the beginning of 2016. its unique partner since Sacem, acting both for itself and Sacem, acting both for itself and on 14 November 2014. on behalf of SCI Neuilly, signed a behalf of SCI Villette, signed a project The assets and the liabilities of project management contract management contract with a firm of Sesam were incorporated into the with a firm of architects and architects and contracts with firms accounts of Sacem at their contracts with firms carrying carrying out the corresponding work. accounting value on 1 January 2015, out the corresponding works. In so far as the works pertain to the in accordance with article 743-1 In so far as the works pertain to structure and refurbishment of the of Accounting Standards Authority the structure and the refurbishment building, the cost thereof will be Regulation 2014-03. of the building, the cost thereof will divided between Sacem and The incorporation distinctly showed be divided between Sacem and SCI Villette. the original value and the SCI Neuilly. An agreement on a split of the cost depreciation of each item. An agreement on a split of the cost was signed on 4 April 2015. 61.6% The value of net assets contributed was signed on 17 December 2015. of the works will be covered by by Sesam to Sacem amounted 54.19% of the works will be covered SCI Villette and 38.4% by Sacem. to €45m. Assets thus contributed by SCI Neuilly and 45.81% by Sacem. This split may be revised once correspond mainly to user This split may be revised once the definitive cost breakdowns are receivables amounting to €12m the definitive price breakdowns are received from the firms. and cash flow amounting to €33m. received from the firms. In the accounts dated 31 December The liabilities that were transferred In the accounts dated 31 December 2015, the costs break down to correspond to sums collected and 2015, the costs break down to €645,435 for SCI Villette and awaiting distribution amounting to €165,974 for SCI Neuilly and €140,251 €402,349 for Sacem. €19m, fees still to be collected and for Sacem. then paid out amounting to €19m, and sundry debts amounting to €7m. Sacem took over all of Sesam’s contractual rights and obligations on the date of the operation as there was no opposition by debtors within the 30-day period. Sesam’s activities, which were mainly exercising and administrating copyright within the framework of creating or using multimedia (on-line) programmes, continues within Sacem.

ANNUAL REPORT 2015 | SACEM 53 Financial statements Appendices

Ratio between net costs and collections % in relation to all collected rights (Performing, Mechanical Reproduction/Common Users and Mechanical Reproduction)

2014 (000) € 829,660 2015 (000) € 862,229

2015 2014

2015/2014 €000 % % % €000

Gross costs for the accounting year 211,097 206,881 to be deducted – Transfer of costs -1,659 -1,740 – Re-invoicing -25,727 -25,556 – Other operational revenue -20 -482 – Provision write-backs -1,925 -1,911 – Non-recurrent costs -3,363 -1,505 Net costs 178,402 175,685 – Financial revenue -38,708 -39,404 – Member subscriptions, unclaimed fees, sundry -2,384 -2,123 Total net costs 137,3 0 9 15.92 -0.25 16.17 134,158 Extraordinary income -366 -1,273 Net cost of extraordinary income 137,675 135,431 Deductions from rights (withheld and undistributable) 134,951 144,117 Surplus (insufficiency) for the accounting year -2,724 8,685

54 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Statement of fixed assets Acquisitions, value creations, accruals and Disposals, increases by spin-offs, transfers deactivations, between line repayments items, Decreases by of loans, Gross values at new loans, transfers reductions Gross values at 1 January increases of between of accrued 31 December 2015 accrued interests line items interests 2015 €000 €000 €000 €000 €000 Intangible assets Concessions, patents, licences, brands, processes(1) 87,0 9 0 15,463 – 35 102,518 Advance payments and instalments(1) 13,290 12,355 15,542 – 10,103 100,380 27,818 15,542 35 112,621 Tangible assets Land(2) 557 – – – 557 Buildings(2) 61,049 333 – 1,758 59,624 Other tangible assets(3) 59,646 1,909 – 534 61,021 Advance payments and instalments 503 1,915 1,419 – 999 121,755 4,157 1,419 2,292 122,201 Investments Shareholdings(4) 10,645 – – – 10,645 Investment-related receivables(5) 12,577 5,183 – 5,250 12,510 Loans 5,889 350 – 241 5,998 Other financial assets 214 344 – 9 549 29,325 5,877 – 5,500 29,702 Grand total 251,460 37,8 52 16,961 7,827 264,524

(1) The main movements are from software developments and the release of applications (Webmo 1 and 2, FastTrack, Smart, Balachat, Candi, Felix, Homer, Octave, Selol, Ulysse, Hot…). (2) The real estate investments relate to the acquisition of the Sacem Luxembourg premises for €115,776 (complementary buildings costs) and renovation works for €217,324, thereof €211,597 for the head offices and €5,727 for several delegation offices. The sales of real estate property during the fiscal year 2015 relate to the offices of Luxembourg, Quimper, Lyon and Marseille. (3) The main investments in other tangible assets relate to the acquisition of personal computers and IT equipment for €911,005, office supplies for €437,250,office furniture for €95,012, miscellaneous technical equipment for the head office for €129,297 and others supplies for €7,389. The works accounted for €328,678 thereof €231,588 for the head office and €97,090 for the delegations. The auction sale of Sacem art works for €73,905, disposal of office equipment for €418,000, office furniture for €4,709 and IT equipment for €37,264 had a decreasing effect on tangible assets. (4) The decrease of shareholdings is composed as follows: €80 corresponding to the cancellation of shares as a result of the full assets transfer from Sesam to Sacem on 1 January 2015; €110 as a result of the dissolution of GRD Design corporation. (5) The change in investment-related receivables include the results, call for funds and repayments of the Neuilly, Châteaudun and Villette real estate companies.

ANNUAL REPORT 2015 | SACEM 55 Financial statements Appendices continued

Amortisation statement Decreases/ amortisation relating to Increases/ assets removed Amortisation at allocations from the balance Amortisation at 1 January during the sheet and 31 December 2015 fiscal year reversals 2015 €000 €000 €000 €000 Intangible assets Concessions, patents, licences, brands, processes 58,906 10,786 35 69,657 58,906 10,786 35 69,657 Tangible assets Buildings 33,755 1,734 325 35,164 Other tangible assets 49,622 2,465 460 51,627 83,378 4,199 785 86,791 Total amortisation of fixed assets 142,284 14,985 820 156,448

The allocations registered in the income and expenses statement amount to €14,912,148. The difference of €72,774 is explained by the transfer to Sacem of the SESAM fixed assets and associated amortisation in the frame of the full assets transfer operated on 1 January 2015. Said fixed assets being fully depreciated, they were disposed of in the fiscal year 2015.

56 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Provisions and depreciation statement Increases/ Decreases/ Amount at allocations reversals Amount at 1 January during the during the 31 December 2015 fiscal year fiscal year 2015 Sections and items €000 €000 €000 €000 Provisions Provisions for contingencies For litigations(1) 386 227 15 598 Provisions for expenses Employee’s length of service award 2,268 80 – 2,348 Others 105 29 – 134 2,759 336 15 3,080 Depreciation On members’ debt accounts 1,931 117 148 1,900 On miscellaneous receivables(2) 1,762 – 1,762 0 On traded debt securities 1,732 – – 1,732 5,425 117 1,910 3,632 Grand total 8,184 453 1,925 6,712

Of which additions and reversals Operating 8,184 226 148 6,712 Non recurring result – 227 1,777 –

(1) Provisions for litigations: These provisions cover labour litigation costs based on the actual risk exposure. (2) Provisions for depreciation of miscellaneous receivables: In the 2014 financial statements, the current account advance that Sacem had granted to GRD Limited in the frame of a project implementing an international music database was fully depreciated. Given the definitive non-repayment of the advance granted by Sacem, the corresponding loss was registered in the non recurring expenses, said expense being offset by the provision reversal.

ANNUAL REPORT 2015 | SACEM 57 Financial statements Appendices continued

Statement of receivables and debts by maturity Gross Due within Due beyond amount one year one year Receivables €000 €000 €000 Fixed assets Investment-related receivables 12,510 – 12,510 Loans 5,998 – 5,998 Other financial assets 549 121 428 Current assets User receivables 209,059 208,908 151 Other receivables 42,091 41,638 453 Prepaid expenses 2,331 2,126 205 Total 272,538 252,793 19,745

Loans due within one year 350 Loans due beyond one year 241

Gross Due within Due beyond amount one year one year Debts €000 €000 €000 Bank loans and debts 213 213 Trade payables and related accounts 5,563 5,563 Tax and social security debts 67,4 8 3 67,4 8 3 Debts on fixed assets and related accounts 3,209 3,209 Other debts: Collections to be distributed 788,535 788,535 Users 7,774 7,774 Non-paid notified royalties 164,236 164,236 Members 38,869 38,869 Sundry debt(1) 303,966 33,574 270,392 Deferred income 5,793 5,793 Total 1,385,641 1,115,249 270,392

(1) Sundry debt = €303,965,944 of which €254,518,092 refer to the surplus of guaranteed members’ social aids.

Under the terms of Sacem’s social programmes, members having obtained rights based on a number of points, can, under certain conditions, benefit from additional resources in the form of quarterly allocations. Each year, the Board of Directors re-assesses the service value of the points for the ongoing year. Hence, there is no guaranteed future allocation amount, which could be paid under the terms of the assistance allocation scheme. Consequently, and with regards to the non-annuity character of this regime, Sacem’s commitment is limited to the ‘social programme’ resources.

58 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Accrued income Amount of accrued income included in the following balance sheet items: Amount €000 Accrued interests on bonds, bills and similar securities 16,481 Accrued interests on interest-bearing bank accounts 64 Accrued interests on savings accounts 779 Trade receivables 2,794 Other receivables: Social organisations, state and sundry debtors 2,636 Total 22,754

Expenses to be paid Amount of expenses to be paid included in the following balance sheet items: Amount €000 Bank loans and debts 0 Trade payables 1,786 Tax and social security debts 27,141 Debts on fixed assets 386 Other debts 1,636 Total 30,949

Prepaid expenses and deferred income Expenses Income €000 €000 Operating expenses/income prepaid expenses 2,023 Inventory 308 excess of management levies 31 December – 5,793 Total 2,331 5,793

Share capital structure The share capital is variable. It is made up of the members’ admission fees at their historical book value. 3,921 admissions were registered in 2015. On 31 December 2015, Sacem had more than 155,000 members. The admission fee was at €127 for the fiscal year 2015 (same as 2014). Transfer of expenses Concerning the income from Private Copying, the Board of Directors decided, from the 2004 fiscal year onwards, to reintroduce the principle of withholding administration expenses relating to the running costs related to management of cultural aid (25% Private Copying levy). The line item ‘transfer of expenses’ conveys this decision.

ANNUAL REPORT 2015 | SACEM 59 Financial statements Appendices continued

Non recurring result The non recurring income of €2,555,000 relates to the sales revenue of the real estate of the head office of Luxembourg and the delegations offices of Quimper, Lyon and Marseille. The non recurring income also relates to the sales revenue from the disposal of office furniture and art works for €14,661. The other non recurring income amounts to €427,942 and relates to the repayments of insurance claims, settlements by mandators of irrecoverable debts, miscellaneous adjustments and gain/loss of exchange rate differences. The non recurring expenses relate to the following: Net book value of sold assets: €1,432,027 for real estate, €187 for others assets and €73,718 for art works. ■■ €1,762,079 linked to the loss resulting from the definitive non-repayment of the advance granted by Sacem to GRD Limited. ■■ €95,178 refers to gain/loss of exchange rate differences and miscellaneous adjustments.

Elements concerning related and associated companies Amounts relating to Affiliated Items Associated companies companies €000 €000 Shareholdings 10,640 5 Investment-related receivables 12,310 Other receivables 3,718 1,030 Sundry debt 11,933 Income from investment in subsidiaries and associates 5,075

Financial commitments Amount Commitments given €000 Bank guarantees for members 41 Lump sum retirement benefits(1) 14,382 Financial support commitment(2) –

(1) The retirement packages are according to company agreements. For the evaluation, the following assumptions were made: ■■Sacem employees do not work after the age of 67. ■■Some employees are likely to retire voluntarily between the age of 62 and 64. ■■Some employees are only likely to retire voluntarily between the age of 65 and 67. ■■A 1.19% discount rate (TMO 2nd half of 2015) and a social security rate of 47.92%. ■■Taking into account a turnover per age bracket identical to that of 2014. (2) As a majority holder of SDRM, Sacem has committed itself to implement necessary measures to prevent a pre-matured sale of traded securities in the case of a cash shortage at SDRM, thus avoiding capital losses for SDRM which would have an impact on the accounting of this asset category.

60 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Average headcount Indicator 114 of the social balance sheet, combined head office/regions average headcount Indicator 123 of the human resources report, temporary workers

Employees Salaried made available employees to the company Executives 309 – Senior staff 255 23.08 Employees 903 – Total 1,467 23.08

List of subsidiaries and associated companies Share of the outstanding Result of the Subsidiaries and associates Capital in euros capital last fiscal year A – Detailed information regarding the subsidiaries and associated companies 1 – Subsidiaries (more than 50% of the outstanding capital): SDRM 61 59/61 5,143,688 Sacem Luxembourg 10,000 75% 0 SCI OF 225-227 AVENUE CHARLES DE GAULLE 914,700 75% 5,926,391 SCI CHATEAUDUN 304,900 75% 385,957 SCI VILLETTE 2,286,735 2/3 510,687 2 – Associates (10 to 50% of the outstanding capital): F.T . ‘The Digital Copyright Network’ 37,000 14.4% Not provided B – General information concerning other subsidiaries and associates 1 – Subsidiaries not referred to in A: (a) French None None None (b) foreign None None None 2 – Associates not referred to in A: (a) French – BIEM 412 1/27 Not provided (b) foreign None None None

ANNUAL REPORT 2015 | SACEM 61 Financial statements Appendices continued

Attribution of rights at the fiscal year end Outstanding rights on 31 December Outstanding of the current rights on year 31 December Collections (See liabilities of the previous to be in current year distributed Amounts fiscal (See Liabilities held by Sesam Management attributed Amounts y ear’s balance in previous prior to the full Levy to the aid attributed to sheet) fiscal assets transfer Collections (See Profit for creation social or Amounts (1)+(2)+(3)- year’s balance on 1 January of the fiscal and Loss (Article cultural attributed to ((4)+(5) sheet) 2015 year Statement) L.321-9) aid rightholders(*) +(6)+(7)) (1) (2) (3) (4) (5) (6) (7) = (8) Nature of payments €000 €000 €000 €000 €000 €000 €000 €000 1 – Payments for which management is entrusted by the rightholders 638,125 16,925 781,038 143,590 – 46,708 608,957 636,833 Public Performance Rights and Normal Users 509,027 16,925 6 37,6 0 0 119,154 – 44,206 483,802 516,389 Mechanical Reproduction Rights 129,098 – 143,438 24,436 – 2,502 125,155 120,444 2 – Payments for which management is entrusted according to the law/CPI 45,185 – 81,191 2,899 25,358 2,176 50,365 45,578 Article L. 132-20-1 (right to authorise the retransmission by cable, simultaneously, in full and without any changes, in the national territory, of a work televised from a Member State of the European Community) DEP 3,632 – 2,182 243 – 149 1,346 4,075 DRM 1,228 – 1,016 180 – 27 942 1,096 Article L. 311-1 (for the private copying of audio works) 27,378 – 62,274 1,926 18,988 1,807 38,295 28,636 Article L. 311-1 (for the private copying of audiovisual works) 12,946 – 15,719 550 6,370 193 9,782 11,771 Total 683,310 16,925 862,229 146,489 25,358 48,884 659,322 682,411 (**)

(*) The ‘attributed amounts’ refer to the corresponding amounts in the individual account of the rightholder. (**) Including provisional deductions for expenses (€17,712,415) and for social aid (€25,505,095).

62 SACEM | ANNUAL REPORT 2015 Strategic overview Management report Financial statements

Summary of the amounts remaining to be attributed to the rightholders Gross collections Outstanding amounts Previous Current Previous Current fiscal year fiscal year fiscal year fiscal year Rightholders €000 €000 €000 €000 Total 829,660 862,229 35,936 38,652

Summary of the amounts remaining to be attributed individually Payments for which management is entrusted by the rightholders: This financial year Copyright holders €000 Public Performance Rights and Normal Users 477,247 Mechanical Reproduction Right – Sacem management 161,947 Total 639,194

Summary of the amounts remaining to be attributed individually Payments for which management is entrusted according to the law: Amount Year of Sections and items €000 collections Article L. 132-20-1 (right to authorise the retransmission by cable, simultaneously, in full and without any changes, in the national territory, of a work televised from a Member State of the European Community) Not applicable Article L. 311-1 (for the private copying of audio works) 5,569 2015 3,735 2014 3,448 2013 Sub-total 12,752 Article L. 311-1 (for the private copying of audiovisual works) 1,114 2015 1,312 2014 1,350 2013 Sub-total 3,776 Total 16,528

ANNUAL REPORT 2015 | SACEM 63 Glossary

Definition

ADAGP French Society of Authors of Visual Arts ADAMI French Collective Management Society for Performing Artists and Musicians ADSL Asymmetric Digital Subscriber Line AKM Austrian Society of Authors, Composers and Publishers ANC French Accounting Standards Board ARMONIA First pan-European hub for licensing online services ARTISJUS Hungarian Bureau for the Protection of Authors’ Rights BIEM International organisation representing mechanical rights societies CASSANDRA Database Management System (Apache Foundation) (or APACHE CASSANDRA) Catch-up TV A system for watching TV programs after they have been broadcasted using a computer, phone, or other electronic device connected to the Internet CISAC International Confederation of Societies of Authors and Composers CMO Collective Management Organisation CNV French National Centre for Song, Variety and Jazz DDEX Digital Data Exchange: international standards for sharing musical data DEP Public performance rights DGA Directors Guild of America DRM Mechanical rights DSP Digital Service Provider Elasticsearch Search Engine (Apache Foundation) ESCP Business School in Paris FastTrack The leading technical developer for the network infrastructure required to deliver broadly adopted solutions in the music, media and entertainment industry FCFA Franco-American Cultural Fund FCM Musical Creation Fund General rights Authors’ rights collected by the regional network (concerts, shows, background music, nightclubs, cinema…) GESAC European Grouping of Societies of Authors and Composers HADOOP Open-source software framework for distributed storage and distributed processing of very large data sets (Apache Foundation) IPC French Intellectual Property Code IRMA Information and Resources Center for Popular Music IT Information technology MANON Invoicing system MPA Motion Picture Association Private Copying Private Copying is a system which allows private individuals to copy works for their own private use, while remunerating creators RIDA French International Review of Authors’ Rights SABAM A Belgian Society of Authors, Composers and Publishers SACD French Society of Dramatic Authors and Composers SCAM French Civil Society of Multimedia Authors SCI French Property Investment Company SCPP Society of Phonogram Producers: collects and distributes royalties for its members for the exploitation of sound recordings and music videos SDRM French Collecting Society for Mechanical Reproduction Rights for Authors, Composers and Publishers SELECT ERP enterprise resource planning

64 SACEM | ANNUAL REPORT 2015 Definition

SGAE Spanish Society of Authors and Publishers SIAE Italian Society of Authors and Publishers SNEP French National Phonographic Producers’ Union SPA Portuguese Authors’ Society SPEDIDAM Society for the Collection and Distribution of Artists’ and Performers’ rights SPPF French Phonogram producers’ collecting society SPRD Collecting and Distributing Society SPRE French society managing neighbouring rights/equitable remuneration for its four members: SPPF/SCPP representing record companies and ADAMI/SPEDIDAM representing artists/musicians SUISA Swiss Cooperative Society of Music Authors and Publishers SVOD Subscription video on demand (SVoD) refers to a service that gives users unlimited access to a wide range of programs for a monthly flat rate TMO Average bond rate TNT French National Digital Terrestrial Television (DTT in English) UGC User-Generated Content: any form of content created by users of an online system or service VOD Video-On-Demand, which allows consumers to select and watch the video content they want, when and where they want WEBDR Customer Relationship Management System WGAW Writers Guild of America

Front Cover: Graphic music waves ©iStock Inside front cover: The Do ©Din thi tien/Dalle, Louane ©Aika/Dalle, Boy playing guitar ©iStock P1: Laurent Petitgirard ©all rights reserved, Jean-Noël Tronc ©Marc Chesneau P2: The Avener ©Marion Barat/Dalle P3: Imany ©Barron Claiborne P4: Laurent Petitgirard ©all rights reserved P6: Jean-Noël Tronc ©Marc Chesneau P7: Selah Sue ©Alexander Brown P13: Stromae ©Vincent Capman/Dalle P14: Angélique Kidjo ©Marc Chesneau P15: Christine and the Queens ©Faustine/Dalle, Viola ©iStock, Sheet music ©iStock P17: Crowd ©iStock, Guitar ©iStock, Graphic waves ©iStock P18: Alexandre Desplat ©Future image/Dalle P24: Christine and the queens ©Marc Chesneau P25: Stromae ©Antoine Melis, Ibeyi ©Violence/Dalle, Shai Maestro ©Herbert Ejzenberg, Girl with headphones ©iStock P29: Board ©Lionel Pagès P30: TV camera ©Marc Chesneau, Crowd of hands ©iStock, Man with microphone ©iStock P33: Randall Wixen, personal photo

Designed and produced by Instinctif Partners www.instinctif.com Sacem

Annual Report and Accounts 2015 Accounts and Report Annual

225, avenue Charles de Gaulle 92528 Neuilly sur Seine Cedex France

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